THE  CURRENCY— SPECIE  PAYJMENTS. 


SPEECH 


HON.  JOHN  SHERMAN, 

OF     OHIO, 


THE  UNITED  STATES  SENATE, 


JANUARY   16,   1874. 


WASHINGTON: 

GOVERNMENT     PRINTING     OFFICE. 

18  7  4. 


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UCSB   LIBHAHY 


SPEECH 


HOIS'.   JOHN    SHERMAN 


The  Senate  bavins  under  consideration  the  following  vesolution,  reported  from 
the  Committee  on  Finance: 

"Resolved,  That  it  is  the  duty  of  Congress  during  its  present  session  to  adopt 
definite  measures  to  redeem  the  pledge  made  in  the  act  appiflved  March  18,  1869, 
entitled  "An  act  to  strengthen  the  public  credit,'  as  follows:  'And  the  United 
States  also  pledges  its  f;iith  to  iiialve  iiroxision  at  the  earliest  practicable  period  for 
the  redemption  of  the  Tnited  States  notes  in  coin ; "  and  the  Committee  ou  Finance 
is  directed  to  I'eport  to  tlie  Senate,  at  as  caily  a  day  as  practicable,  such  measures 
as  will  not  only  redeen\  this  pledge  of  the  public  faith,  but  will  also  furnish  a  cur- 
rency of  unifonu  value,  always  redeemable  in  goldoritseciuivalent,  aiul  so  adjusted 
as  to  meet  this  changing  wants  of  trade  and  coninu^rce ; "  * 

The  pending  question  being  on  the  amendment  submitted  by  Mr.  Ferry,  of 
Michigan,  to  strike  out  all  after  the  word  "resolved,'*  and  insert  tlie  following: 

"That  the  Committee  on  Finance  is  directed  to  report  to  the  Simate,  at  as  early  a 
day  as  practicable,  such  measures  as  will  restore  commercial  confidence  and  give 
stability  and  elasticity  to  the  circulating  medium  through  a  moderate  increase  of 
cuiTcncy" — 

Mr.  SHERMAN  said : 

Mr.  Presidknt,  it  was  iny  purpose  not  to  address  tlie  Senate  until 
I  had  the  benefit  of  theo}>inionsof  all  Senators  who  wished  to  express 
their  opinions;  and  then  I  juoposed,  in  closing  the  debate,  to  state 
the  general  reasons  that  iuHuenced  the  Committee  on  Finance  to 
report  this  resolution.  But  as  the  Senator  from  Illinois  [Mr.  Logax] 
tells  me  he  is  not  very  well  to-day,  and  other  Senators  are  not  pre- 
pared, I  prefer,  rather  than  cause  delay,  to  state  as  best  I  can  those 
reasons  now. 

And,  sir,  at  the  outset  of  my  remarks  I  wish  to  state  some  general 
propositions  established  by  experience,  and  the  concurring  opinions  of 
all  writers  on  political  economy.  They  may  not  be  disjiuted,  but  are 
constantly  overlooked.  They  otight  to  be  ever  present  in  this  discus- 
sion as  axioms,  the  truth  of  which  has  been  so  often  proven  that  proof 
is  no  longer  requisite. 

The  most  obvious  of  these  axioms,  which  lies  at  the  foundation  of 
the  argument  I  wish  to  make  to-(hiy,  is  that  a  specie  standard  is  the 
best  and  the  only  true  standard  of  all  values,  recognized  as  such  by 
all  civilized  nations  of  our  generation,  and  established  as  such  bythe 
experience  of  all  commercial  nations  that  have  existed  from  the  ear- 
liest period  of  recorded  time.  While  the  United  States,  as  well  as 
all  other  nations,  have  for  a  time,  under  the  pressure  of  war  or  other 
calamity,  been  driven  to  establish  other  standards  of  value,  yet  they 
have  all  been  impelled  to  return  to  the  true  standard;  and  even  while 
other  standards  of  value  have  been  legalized  for  the  time,  specie  has 
measured  their  value  as  it  now  measures  the  value  of  our  legal-tender 
notes. 


This  axiom  is  as  immutable  as  the  hiw  of  gravitation  or  the  laws  of 
the  planetary  system,  and  every  device  to  evade  it  or  avoid  it  has,  by 
its  failure,  only  demonstrated  the  universal  law  that  specie  measures 
all  values  as  certainly  as  the  surface  of  the  ocean  measures  the  level 
of  the  earth. 

It  is  idle  for  us  to  try  to  discuss  Avith  intelligence  the  cun-ency  ques- 
tion until  we  are  impressed  with  the  truth,  the  universality,  and  the 
immutability,  of  this  axiom.  Many  of  the  crude  ideas  now  advanced 
spring  from  ignoring  it.  The  most  ingenious  sophistries  are  answered 
by  it.  It  is  the  governing  principle  of  finance.  It  is  proved  by  ex- 
perience, is  stated  clearly  by  every  leading  writer  on  political  econ- 
omy, and  is  now  here,  in  our  own  country,  proving  its  truth  by 
measuring  daily  the  value  of  our  currency  and  of  all  we  have  or  pro- 
duce. I  might,  to  establish  this  axiom,  repeat  the  history  of  finance 
from  the  shekels  of  silver, "  current  money  with  the  merchant,"  paid  by 
Abraham,  to  the  last  sale  of  stock  in  New  York.  I  might  quote  Ai'is- 
totle  and  Pliny,  as  well  as  all  the  writers  on  political  economy  of 
our  own  time,  and  trace  the  failui'e  of  the  innumerable  efforts  to 
establish  some  other  standard  of  value,  from  the  oxen  that  measured 
the  value  of  the  armor  of  Homeric  heroes  to  the  beautifully  en- 
graved promise  of  our  day ;  but  this  would  only  be  the  hundied-times- 
told  tale  which  every  student  may  find  recorded,  not  only  in  school- 
books,  but  in  the  writings  of  Humboldt,  Chevalier,  Adam  Smith,  and 
others  of  the  most  advanced  scientific  authorities.  They  all  recognize 
the  precious  metals  as  the  universal  standard  of  value.  Neither  gov- 
ernments, nor  parliaments,  nor  congresses  can  change  this  law.  It  de- 
fies every  form  of  authority,  but  silently  and  surely  asserts  itself  as  a 
law  of  necessity,  beyond  the  jurisdiction  of  municipal  laAV. 

Other  mediums  of  exchange  have  been  devised  and  are  in  general 
use,  but  their  value  is  measured  every  moment  by  the  true  standard 
of  the  precious  metals.  And  this  standard  will  measure  the  value  of 
your  three  sixty-five  convertible,  elastic,  irredeemable  bonds,  and  of 
any  ctiiTency  we  may  issue,  before  they  are  issued,  the  moment  they 
are  issued,  and  at  every  hour  while  they  are  in  circulation.  Tlie  igno- 
rant and  the  credulous  will  measure  their  labor,  their  i)roductions, 
and  theu'  property  by  that  or  any  other  standard  you  may  devise ; 
but  the  sagacious  and  prudent  will  test  it  by  the  specie  standard. 
The  barometer  in  Wall  stieet  will  quote  it  by  the  specie  standard,  and 
every  banker  and  broker  will  have  more  to  do  with  fixing  its  daily 
changeable  value  than  any  of  you.  If  we  will  only  now  recognize 
and  act  upon  the  fundamental  truth  that  there  is  and  can  be  but  one 
true  standard  of  value,  and  that  the  specie  standard,  we  will  have 
advanced  a  great  way  in  the  solution  of  the  question  upon  which  we 
are  called  ui)on  to  act. 

The  reasons  for  this  are  obvious.  The  innumerable  wants  of  every 
civilized  man,  however  moderate  his  income,  demands  the  labor  of 
thoiisands  of  pei-sons.  The  slave  who  toiled  for  his  daily  bi-ead  and 
scanty  clothing  consumed  more  or  less  of  the  ])roducts  of  the  labor 
and  capital  of  an  army  of  farmers,  artisans,  and  capitalists,  and  the 
exchanges  of  all  these  productions  can  only  be  made  by  some  recog- 
nized standard  of  value  wliich  will  measure  the  value  of  a  pin  "as  well 
as  of  the  highest  prodiictiou  of  arl;.  This  standard  must  be  of  intrin- 
sic value,  durable,  divisible,  easily  transported,  of  universal  use,  and 
of  the  same  qualities  wherever  found.  Gold  and  silver  alone  unite 
all  these  qualities.    To  use  the  language  of  another : 

Thoiifih  far  from  invariable,  the  value  of  these  metals  changes  only  by  slow  de- 
gi-ees;  they  ai'o  roailily  divisible  into  any  number  of  parts,  -whieb  may  be  reunitoil 


by  means  of  fusion  without  loss ;  they  do  not  dotei-iorate  by  being  kept;  their  film 
and  compact  texture  makes  tliem  ditticult  to  wear ;  tlieir  cost  of  production,  espe 
cially  of  gold,  is  so  considerable  that  they  possess  great  value  in  small  bulk,  and 
can,  of  course,  be  transjjorted  with  comparative  f acility ; .  and  their  identity  is  per- 
fect, thepur-e  gold  and  silver  supplied  byRussiaand  Australia  ha\ing  precisely  the 
same  qualities  with  that  fuinished  by  California  and  Peru.  Ho  wonder,  therefore, 
when  almost  every  projKirty  necessary  to  constitute  money  is  possessed  in  so  emi- 
nent a  degi-ee  by  the  precious  metals,  tliat  they  have  been  used  as  such  from  a  very 
remote  era.  Their  employment  in  this  function  is  not  ascribable  to  accident,  to  the 
genius  of  any  individual,  or  to  any  peculiar  combination  of  circumstances.  It  grew 
naturally  out  of  the  wants  and  necessities  of  society  on  the  one  hand,  and  the  means 
of  supjtlying  them  possessed  by  these  metals  on  the  other.  They  became  universal 
money,  as  Turgot  has  observed,  not  in  consequence  of  any  arbitrary  agreement 
among  men,  or  of  the  intervention  of  any  law,  but  by  the  natui-e  and  force  of  things. 

Of  late  years  nmcli  difficiilty  lias  grown  out  of  tlie  slightly  varying 
value  of  silver  and  gold,  as  compared  with  each  other,  and  the  tendency 
of  opinion  has  been  to  adopt  gold  alone  as  the  standard  of  value. 
The  United  States  has  twice  changed  the  relative  value  of  these  metals, 
and  other  modern  nations  liaAe  been  driven  to  similar  expedients. 
At  the  Paris  monetary  conference,  held  in  1867,  which  I  had  the  honor 
to  attend,  the  delegates  of  twenty  nations  represented  agreed  to  recom- 
mend gold  alone  as  the  standard  of  value.  The  United  States,  and 
nearly  all  the  commercial  nations,  have  adopted  this  standard,  and 
reduced  the  use  of  silver  to  a  mere  token  coinage  of  less  intrinsic  value 
than  gold,  but  maintained  at  par  with  gold  l)y  the  right  to  he  con- 
verted into  gold  at  the  will  of  the  holder.  So  that  for  all  practical 
purposes  we  may  regard  gold  as  the  only  true  standard,  the  true  money 
of  the  world,  by  which  the  value  of  all  property,  of  all  productions,  of 
all  credits,  and  of  every  medium  of  exchange,  and  especially  of  all 
paper  money,  is  tested. 

Specie,  in  former  times,  Avas  not  only  the  universal  standard  of  value, 
but  it  was  the  general  medium  of  all  exchanges.  In  modern  times 
this  is  greatly  changed.  Specie  is  still  the  universal  standard  of  value, 
but  it  lias  ceased  to  be  even  the  usual  medium  of  exchange.  The  fail- 
ure to  distinguish  between  the  standard  of  value  and  the  medium  of 
exclianges  occasions  many  of  the  errors  into  Avhich  so  many  fall,  and 
nearly  every  Senator  who  has  spoken  on  one  side  of  the  question  has 
fallen  into  this  error.  Specie  has  lost  a  portion  of  its  sovereign  power, 
for  with  the  enormous  increase  of  exchanges  it  was  found  that,  valu- 
able as  it  is,  it  is  too  heavy  to  transport  from  place  to  place  as  a  me- 
dium of  exchange.  The  perils  of  the  sea,  the  dangers  of  theft  and 
robbery,  led  to  devices  to  substitute  promises  to  pay  gold  in  j)lace  of 
the  actual  gold. 

Ill  this  way  bills  of  exchange,  drafts,  promissory  notes,  checks,  and 
like  commercial  paper  came  jiiito  use,  so  that  now,  even  in  this  age  of 
paper  money,  it  is  computed  that  fully  95  per  cent,  of  all  the  ox- 
changes  in  commercial  cities  is  made  by  such  promises  to  pay.  Only 
5  per  cent.,  or  one-twentieth  part,  of  the  payments  in  New  York  are 
made  in  money,  and  this  chiefly  in  pajier  money  and  not  in  gold.  If 
gold  were  now  the  only  legal  standard  of  value  it  would  not  be  used 
as  a  medium  of  exchange  for  1  per  cent,  of  the  transactions  of  daily 
life.  The  convenience,  the  portability  of  commercial  paper  and  paper 
money  has  superseded  gold  as  a  medium  of  exchange,  but  has  left  it 
as  the  fixed,  the  only  true  standard  of  value,  by  which  the  value  of 
all  mediums  of  exchange  is  tested. 

In  England,  where  tlie  specie  standard  of  values  is  jealouslj'^  main- 
tained, and  where  no  Bank  of  England  note  can  issue  beyond  a  pre- 
scribed limit  except  upon  a  dejiosit  of  an  equal  amount  of  gold,  specie 
is  not  used  as  a  medium  of  exchange  to  ah  amount  exceeding  2  per 


6 

cent,  of  tbo  aggregate  paymente.  Ninety-eigLt  per  cent,  of  iill  i)ay- 
ments  is  in  couniiercial  paper  or  bank-bills,  but  tbe  fixed  and  unalter- 
able standard  of  value  of  all  tbis  paper  money  was  gold  coin.  Some- 
times tbe  daily  payments  in  London  alone  exceed  all  tbe  gold  iu 
Great  Britain,  but  only  about  1  per  cent,  is  actually  paid  in  gold,  and 
about  5  per  cent,  in  Bank  of  England  notes.  Iu  France,  until  tbe 
recent  German  Avar,  gold  and  silver  were  used  more  as  a  medium  of 
excbange  tban  in  anj-  country  of  our  day.  Sbe  bad  from  1868  to  1870 
in  cii'culation  an  amount  of  gold  and  silver  greater  tban  tbe  aggi'cgate 
of  gold  and  silver  of  Great  Britain,  tbe  United  States,  and  Prussia. 
Her  specie  circulation  amounted  to  §700,000,000.  Driven  by  tbe 
necessities  of  tliat  war  sbe  bas  sul>stitxite(l  paper  money  amoiuiting 
to  $520,000,000  as  a  medium  of  excbange  for  tbe  gold  and  silver 
formerly  cii'culated,  but  witli  wise  statesmansbip  sbe  now  maintains 
her  present  A'ast  volume  of  paper  money  at  or  near  par  iu  gold. 
Sbe  bas  adopted  auotber  medium  of  excbange,  but  sbe  maintains,  in 
bannony  witb  reason  and  experience,  tbe  gold  standard  of  value. 

All  modern  experience  teacbes  tbe  importance  of  tbe  division  of 
labor.  Indeed  tbat  is  tbe  favorite  topic  of  every  writer  on  political 
economy.  Every  man  to  bis  trade,  and  if  tbe  trade  can  be  subdivided 
into  many  specialties,  tben  every  man  to  bLs  specialty.  I  was  in  tbe 
celebrated  manufactory  of  steel  pens  of  Mr.  Gillott,  and  saw  tbat  it 
required  the  labor  of  tbirty  men  and  women  to  contribute  to  tbe 
making  of  tbis  implement.  Eacb  one  Avas  skillful  in  bis  part,  and 
this  part  was  perfectly  done,  and  tbis  subdivision  of  labor  and  skill 
gave  increased  wages  and  value  to  tbe  work  of  eacb  laborer,  secured 
a  fortune  to  the  owners,  and  a  ]ierfect  pen  to  tbe  Avorld.  The  same 
law  which  demands  a  division  of  labor  is  applied  to  professional  and 
scientific  pursuits.  The  laAv  has  many  specialties.  Tbe  honors  of 
science  are  only  won  by  those  who  devote  their  mental  faculties  to 
one  branch  of  study.  The  same  law  extends  to  all  leading  i)roduc- 
tions,  as  cotton,  avooI,  wheat,  corn,  and  gold. 

The  purposes  for  which  eacb  of  these  commodities  is  best  fitted 
are  established  by  experience.  In  this  way  the  experience  of  centu- 
ries in  former  generations  established  gold  both  as  the  standard  of 
value  and  the  medium  of  excbange;  but  modern  necessities  have  now 
established  pai>er  money,  credit  money,  whether  iu  tbe  form  of  bills 
of  excbange,  checks,  bank-l)ills,  or  notes  of  the  State,  as  the  best 
medium  of  exchange,  leaving  gold,  liowever,  as  the  best  and  only 
tnie  standard  of  the  value  of  all  paper  money,  as  well  as  of  all  com- 
modities. 

Now,  it  bas  often  happened,  not  only  in  tbe  United  States,  but  in 
other  countries,  that  credit  money  bas  proved  worthless.  Tbis  is  an 
unavoidable  incident  of  such  money.  So  far  as  tbis  money  consists 
of  checks  or  like  credits  it  must  depend  upon  the  voluntary  contracts 
of  individuals.  Eacli  person  is  at  liberty  to  accept  or  refuse  all  such 
mediums  of  exchange,  and  if  he  suftera  a  loss  by  tbe  failure  of  a 
banker  or  broker  it  is  bis  misfortune,  for  which  the  Government  is  not 
i*esponsible,andcau  give  bim  no  relief,  except  the  lawsfortbe  collection 
of  debts.  But  a  dillercnt  rule  applies  to  ])aper  money  issued  by  a  State 
or  by  a  corporation  authorized  by  the  State  to  issue  money.  Whether 
tbis  nioney  is  a  legal-tender  or  not.  it  is,  by  usage  and  custom,  money, 
and  its  receipt  and  payment  are  practically  as  compulsoi-y  as  if  it  was 
gold  coin.  No  man  can  refuse  it  unless  be  is  a  cax»italist,  who  may 
resort  to  tbe  law  to  enforce  payment  in  legal-tendei"s.  Tlie  laborer 
must  take  it  from  necessity  or  get  no  emiiloyment.  The  merchant 
must  take  it  or  keep  bis  goods.     Usage  in  such  matters  is  stronger 


than  law.  It  is  this  kind  of  money  that  it  is  the  duty  of  the  State  to 
protect  from  depreciation  and  loss.  It  must  secure  it  by  the  best 
security  j)ossible,  and  that  security  in  every  well-ordered  government 
is  the  "  public  faith."  Upon  this  principle  Great  Britain,  France,  and 
the  United  States  have  founded    theii-  financial  systems. 

But  one  other  duty  rests  upon  the  government  undertaking  to  issue,. 
or  to  authorize  the  issue  of  paper  money,  and  that  is  to  maintain  this 
paper  money  at  the  gold  standard.  Great  Britain  and  France  recognize 
this  duty,  and  perform  it.  The  United  States  recognizes  its  duty,  but 
<loes  not  perform  it.  Our  currency  is  founded  upon  the  public  faith. 
The  public  faith  of  the  United  States  is  pledged  to  pay  United  States 
notes  in  coin.  The  national-bank  notes  are  amply  secured  by  bonds 
more  than  sufficient  to  redeem  them  in  coin;  and  yet  they  are  all  de- 
preciated; now  at  10  per  cent,  disconnt,  to-monow  at  11,  and  yester- 
day at  8.  It  is  the  depreciation  of  our  paper  money  that  is  the  stand- 
ing reproach  of  our  financial  sj  stem,  which  lies  at  the  foundation  of 
all  our  troubles,  and  to  remedy  which  is  now  the  most  important  and 
difficult  duty  of  Congress. 

Mr.  President,  thus  far  my  remarks  are  founded  upon  the  experi- 
ence of  ages,  applicable  to  all  coimtries  and  to  all  commercial  nations 
of  our  time.  I  present  them  now  as  axioms  of  universal  recogni- 
tion. And  yet  I  have  heard  these  axioms  denounced  in  this  debate 
as  "platitudes,"  useless  for  this  discussion  in  the  Senate  of  the 
United  States.  The  Avisdom  of  ages,  the  experience  of  three  thou- 
sand years,  the  writings  of  political  economists,  are  whistled  down 
thd  wind  as  if  we  in  this  Senate  were  wiser  than  all  who  have  reasoned 
aiid  thought  and  legislated  upon  financial  ]>roblems — that  all  this 
accumulated  wisdom  consists  of  '"platitudes"  unworthy  to  influence 
an  American  Senate  ui  the  consideration  of  the  aft'airs  of  our  day  and 
generation. 

Sir,  I  do  not  think  so.  If  we  disregard  these  "platitudes,"  Ave  only 
demonstrate  our  own  ignorance  aiul  punish  oxn  constituents  with  evils 
that  we  ought  to  avoid.  I  purpose  now  to  pursue  the  argument  fur- 
ther, and  to  prove  that  we  are  bound  both  by  public  faith  and  good 
policy  to  bring  our  currency  to  the  gold  standard ;  that  such  a  result 
Avas  provided  for  by  the  financial  policy  adopted  when  the  currency 
was  authorized ;  that  a  departure  from  this  policy  was  adopted  after 
the  war  was  over,  and  after  the  necessity  for  a  depreciated  currency 
ceased ;  and  that  Ave  haA^e  only  to  restore  the  old  policy  to  bring  us 
safely,  surely,  and  easily  to  a  specie  standard. 

First,  I  present  to  you  the  pledge  of  the  United  States  to  pay  these 
notes  in  coin  "  at  the  earliest  practicable  period."  In  the  "  act  to 
strengthen  the  public  credit "  passed  on  the  18tli  day  of  March,  1869, 
I  find  this  obligation : 

And  the  United  States  also.soli-nuily  pledgos  its  public  faith  to  make  provision  at 
the  earliest  practicable  period  for  the  redemption  of  the  United  States  notes  in  coin. 

Without  rencAving  the  discussion  in  regard  to  the  nature  of  these 
notes,  or  (juoting  the  decision  of  the  Supreme  Court  of  the  United 
States,  or  the  declaration  of  the  A'arious  acts  of  Congress  from  1862 
doAvn,  I  rest  upon  this  pledge  of  the  public  faith.  IJiuler  Avliat  cir- 
cumstances Avas  it  made  ?  The  condition  of  our  cun-ency,  the  obli- 
gation of  our  bonds,  the  nature  of  our  promises,  had  been  discussed 
l)efore  the  people  of  the  United  States  in  the  campaign  of  1868 ;  vari- 
ous theories  had  been  adA^anced ;  and  the  result  was  that  those  who 
regarded  the  faith  of  the  nation  as  pledged  to  pay  not  only  the  bonds 
of  the  United  States,  but  the  notes  also,  in  coin  prevailed,  and  General 
Grant  Avas  elected  President  of  the  United  States.    On  the  eastern 


8 

portico  of  the  Capitol  on  the  4th  of  March,  1869,  he  made  this  declara- 
tion: 

A  great  debt  has  b«en  contractor  in  Securing  to  us  an<l  our  posterity  the  Union. 
The  payment  of  this,  principal  anrl  interest,  as  well  as  tlie  retiini  to  a  specie  basis, 
as  soon  as  it  can  be  accomplished  without  material  detriment  to  the  debtor  class  or 
to  the  country  at  large,  must  be  provided  for.  To  protect  the  national  honor  every 
dollar  of  Government  indebtedness  should  be  paid  in  gold,  unless  otherwi.se  ex- 
pressly stipulated  in  the  contract.  Let  it  be  understood  that  no  repudiator  of  one 
farthing  of  our  public  debt  \vill  be  trusted  in  public  place,  and  it  will  ^o  far  toward 
strengthening  a  cretlit  which  ought  to  be  the  best  in  the  world,  and  will  ultimately 
enable  us  to  replace  the  debt  with  bonds  bearing  less  interest  than  we  now  pay. 

The  Coii^-ess  of  the  United  States,  in  order  to  put  into  fomi  its 
sense  of  this  obligation,  passed  the  act  "to  .strengthen  the  pnblic 
credit,"  and  the  last  and  most  important  clause  of  this  act  is  the  prom- 
ise which  I  have  just  read,  that  these  notes  should  be  paid  "  at  the 
earliest  practicable  period"  in  coin. 

What  was  the  eifect  of  this  promise  ?  Why,  sir,  I  have  here  the 
daily  register  of  the  sales  of  our  greenbacks  in  New  York,  ))ecause 
that  is  the  legal  efiect  of  transactions  in  gold.  We  have  called  our 
false  standard  the  true  standard,  by  calling  the  dollar  of  oiu-  broken 
ptomises  the  standard  of  value,  when  every  man  of  intelligence  who 
bought  and  sold  anything,  even  our  own  domestic  jiroducts,  knew 
that  gold  was  the  tiiie  standard,  and  measured  our  greenbacks  by  it. 
I  have  here  the  daily  sales,  and  what  do  they  show  f  On  the  day 
we  made  that  promise,  the  18th  of  March,  1869,  the  greenbacks,  the 
notes  of  the  United  States,  were  worth  75f  cents  in  gold  ;  or,  in  other 
Avords,  gold  was  at  a  premium  of  32  per  cent.  That  was  the  measnre 
of  the  credit  of  these  notes  when  we  made  this  ^iromise.  It  took 
nearly  four  dollars  of  greenbacks  to  buy  three  dollars  of  gold.  What 
was  the  result  ?  After  you  enacted  that  law — the  faith  of  the  people 
of  the  United  States  that  you  would  redeem  this  pledge — the  value 
of  your  gi-eeubacks  advanced,  not  rapidly  but  gradually,  and  in  one 
year,  to  within  12  per  cent,  of  par  in  gold. 

Mr.  BAYARD.  Will  the  Senator  permit  me  to  ask  him  whether  he 
does  not  consider,  as  a  far  more  potential  fact  in  producing  the  approx- 
imation of  the  paper  is.snes  to  gold  and  silver,  the  decision  of  the  Su- 
preme Court  of  the  United  States,  made  early  in  1870,  than  the  act 
which  he  has  just  referred  to  f 

Mr.  SHERMAN.  On  the  contrarj'  I  could  show  my  honorable  friend, 
if  it  was  necessary  to  go  into  the  quotations,  that  this  rise  occuiTed 
before  the  decision  was  made. 

Mr.  BAYARD.  I  merely  suggest,  as  a  matt<^r  of  historical  truth,  that 
the  decision  of  the  Supreme  Coui-t  of  the  United  States,  made  by  a 
majority  of  live  to  three  of  its  judges,  declaring  that  the  issue  of  paper, 
and  creating  it  a  legal  tender  by  Congress,  Avas  an  unconstitutional 
exercise  of  power,  had  more  to  do  with  approximating  the  value  of 
paper  issues  Avith  gold  than  any  resolution  or  act  passed  by  the  Con- 
gress of  the  United  States,  merely  reiterating  the  faith  which  every 
one  knew  Avas  pledged  and  existing  when  the  notes  were  issued. 

Mr.  SHERMAN.  Since  my  friend  asks  me  a  question,  I  am  bound 
to  answer  it ;  and  I  say  that  I  do  not  believe  that  decision  had  the 
slightest  influence  on  the  matter.  We  must  judge  of  causes  by  re- 
sults, and  results  show  that  the  rise  in  the  A-alue  of  onr  notes  occurred 
before  the  decision  was  made.  The  causes  of  the  rise  are  not  mate- 
rial to  my  argmnent.  The  fact  is,  that  in  one  year  from  the  time  that 
promise  was  made  the  value  of  our  greenbacks  Avas  over  89  cents  in 
gold.  I  have  here  the  quotations  of  the  18th  of  March,  1870,  which 
give  gold  at  a  premium  of  11  J,  so  that  a  greenback  in  market  value  was 


9 

worth  over  89  in  jjold.  Tims,  in  a  single  year,  from  the  18th  of 
Marcli,  1869,  to  the  18th  of  March,  1870,  the  credit  of  the  United  States 
rose,  so  that  the  barometer  of  the  money  market,  which  you  cannot 
control,  measured  the  depreciation  of  your  note  at  only  11  per  cent, 
instead  of  25  per  cent,  the  year  before. 

Mr.  President,  we  see,  then,  the  effect  of  this  promise.  And  I  here 
come  to  what  I  regard  as  a  painful  feature  to  discuss — how  hare  we 
redeemed  our  promise  ?  It  was  Congress  that  made  it,  in  obedience 
to  the  public  voice ;  and  no  act  of  Congress  ever  met  with  a  more 
hearty  and  generous  approbation.  But  I  say  to  you,  with  sorrow, 
that  Congress  has  done  no  single  act  the  tendency  of  which  has  been 
to  advan(;e  the  value  of  these  notes  to  a  gold  standard  ;  and  I  shall 
make  that  clearer  before  I  get  through.  Congress  made  this  promise 
five  years  ago.  The  people  believed  it  aiul  business  men  believed  it. 
Four  years  have  passed  away  since  then,  and  j'onr  dollar  in  green- 
backs is  woiih  no  more  to-day  than  it  was  on  the  18tli  of  March,  1870 ; 
and  no  act  of  yonrs  has  even  tended  to  advance  the  value  of  that 
greenljack  to  par  in  gold,  while  every  affirmative  act  of  yours  since 
that  time  has  tended  to  depreciate  its  value  and  to  violate  your 
promise. 

Mr.  President,  these  are  simple  facts,  although  it  may  be  painful 
for  us  to  discuss  them.  I  do  not  say  that  Congress,  in  this  matter, 
disregarded  the  will  of  the  people,  because  there  was  a  public  feeling 
against  any  measure  which  tended  to  advance  the  value  of  the  green- 
backs to  the  gold  standard.  I  am  not  complaining  of  Senators  or 
Members  who  represent  their  constituents,  but  I  do  say  that  the  fact 
stands  out  as  clear  as  light,  tliat  the  Congress  of  the  United  States 
which  made  this  jn'omise  has  done  no  single  act  the  tendency  of  which 
even  leads  one  to  suppose  that  it  will  ever  redeem  its  promise. 

Sir,  let  us  see  what  has  been  done.  We  have  paid  $400,000,000  of 
the  public  debt,  and  we  boast  of  it — of  debt  not  due  for  years.  We 
have  paid  to  redeem  that  debt  a  premium  of  $40,000,000.  In  otheT 
words,  we  have  paid  .$440,000,000  to  redeem  four  hundred  millions  of 
debt  not  yet  due,  and  we  have  not  redeemed  a  single  debt  that  was 
due  in  March,  1869;  but,  on  the  contrary,  we  have  increased  the  kind 
of  debts  then  due  more  in  proportion  than  the  increase  of  our  popula- 
tion. And,  sir,  while  our  promise  did  advance  the  credit  of  our  bonds 
and  of  our  notes  alike,  and  while  the  execution  of  that  promise  as  to 
our  bonds  has  advanced  our  bonds  to  above  par  in  gold,  yet  we  have 
done  nothing  whatever  to  redeem  the  second  clause  of  that  pledge ; 
but,  on  the  other  hand,  all  we  have  done  has  been  done  with  the  in- 
tention and  with  the  effect  of  depreciating  the  value  of  our  notes. 

Mr.  MORTON.     I  ask  the  Senator  to  state  what  that  pledge  is. 

Mr.  SHERMAN.  I  will  come  to  my  construction  of  it  in  a  moment. 
I  have  read  it  in  full. 

Mr.  MORTON.    I  mean  practically. 

Mr.  SHERMAN.  I  will  answer  your  construction  that  emasculates 
our  pledge  in  due  tiu)e.  The  Senator  will  find  that  I  shall  not  evade 
his  question. 

Mr.  President,  I  am  not  here  to  find  fault  with  individuals ;  bxit  I 
do  say  that  the  Congress  of  the  United  States  in  the  measures  which 
have  been  adopted  has  not  done  what  it  ought  to  have  done  to  re- 
deem the  pledge  of  the  ptiblic  faith  to  pay  these  notes  in  coin  "at  the 
earliest  practicable  period."  Why,  sir,  at  this  moment  we  are  living 
in  daily  violation  of  this  i)ledge.  I  said  a  moment  ago  that  instead 
of  adopting  measures  looking  toward  specie  payments  we  have  in- 
creased the  volume  of  our  currency  in  every  branch  of  it.    Now  let  us 


10 

see  if  this  bo  true.  I  have  here  a  statement  taken  from  the  official 
report  of  the  Secretary  of  the  Treasury  of  the  amouut  of  the  cur- 
rency on  the  30th  of  Jnne,  1869.  I  cannot  find  a  statement  for  the 
Ist  of  March,  1869,  but  it  was  tlie  same,  because  it  was  tixed  by  law. 
I  find  on  the  SOtbof  June,  1869,  we  had  three  hundred  and  fifty-six  mil- 
lions of  greenbacks,  the  same  amount  that  we  had  on  the  I8th  day  of 
March.  That  was  the  maximum  amount,  as  it  was  supposed,  fixed 
by  law.  Wlien  the  act  of  the  18th  of  March,  1869,  was  pawsed  no  one 
dreamed  that  there  existed  a  power  to  issue  forty-four  millions  more. 

Our  greenbacks  were  then  $356,000,000.  On  tlie  Ist  of  January, 
1874,  according  to  the  last  statement  of  the  public  debt,  they  Avere 
$378,481,339.  We  had,  then,  increased  this  form  of  our  ciuTency 
$22,481,000.  And  that  is  not  all.  Since  that  time,  and  up  to  the  lOtli 
of  January,  according  to  a  New  York'newspaper — and  I  snpposji  it  is 
correct — I  find  that  the  amount  of  legal-tender  notes  outstanding  was 
$381,891,000,  or  an  increase  since  the  Ist  of  January  of  something  like 
$3,400,000,  or  at  the  rate  of  $400,000  a  day.  Every  dollar  of  this  new 
issue  of  paper  money  directly  tended  to  depreciate  that  outstanding 
apd  was  in  violation  of  the  spirit  and  the  provision  of  the  law  of  1869. 
I  am  not  now  speaking  of  the  legal  power  of  the  Secretary  of  the 
Treasury  to  make  this  issue,  because  I  have  already  given  my  opinion 
fully  on  this  subject  in  an  ofificial  report,  but  only  to  call  your  atten- 
tion to  the  fact  that  by  our  acquiescence  Ave  have  actually  watered, 
debased,  and  depreciated  by  new  issues  the  very  notes  we  promised 
to  pay  in  coin  at  the  earliest  practicable  period.  " 

Nor  is  this  all.  Under  authority  clearly  conferred  by  law  to  the 
Secretary  of  the  Treasiu'v,  Ave  haAC  increased  the  fractional  currency 
from  $27,508,928,  at  Avhich  it  stood  on  the  30th  of  June,  1869,  to 
$48,-554,792,  or  an  increase  of  fractional  currency  of  $21,036,000.  Again, 
sir,  driA-en  by  a  local  demand  which  we  could  not  resist,  founded  upon 
a  palpable  injustice  gi-owing  out  of  the  mistake  of  an  officer  of  the 
Government  long  ago  in  the  distribution  of  the  national-bank  circula- 
tion, we  did  authorize  by  law  an  increase  of  the  bank  circulation  to 
the  South  and  West  to  the  amount  of  $54,000,000.  The  amount  of 
bank-notes  issued  at  the  time  Ave  made  this  pledge  Avas  ,$299,789,000 ; 
and  to-day  the  amount  outstanding  is  $339,081,000,  shoAving  an  increase 
in  this  kind  of  notes  of  $39,300,000,  or  an  increase  in  the  currency  since 
the  promise  to  pay  it  in  coin  at  the  earliest  practicable  period,  and  all 
legal  tender  in  effect,  of  $82,317,000 ;  and  noAv  this  process  of  inflation 
is  going  on  daily,  first,  by  the  issue  of  the  balance  of  the  forty-four  mil- 
lion reserve,  and  secondly  by  the  issue  of  new  bank-notes  as  banks  are 
organized  under  the  act  of  July,  1870 ;  and  yet  there  is  a  cry  for  more, 
more. 

Mr.  MORTON.    Will  the  Senator  allow  me  a  word  right  there  ? 

Mr.  SHP:RMAN.    Yes,  sir. 

Mr.  MORTON.  I  ask  the  Senator  if  the  act  of  1870,  authorizing  the 
increase  of  national-bank  circulation  $54,000,000,  did  not  contain  a 
provision  that  those  national-bank  notes  should  not  be  issued  faster 
than  the  3  per  cent,  certificates  were  retired,  being  confined  to  that 
limit ;  and  if  the  3  per  cent,  certificates  at  that  time  Avere  not  held 
by  the  banks  as  a  part  of  their  reserve,  instead  of  greenbacks;  and 
when  the  3  per  cent,  certificates  Avere  retired  in  accordance  with 
that  act  the  greenbacks  did  not  haA'o  to  take  their  place,  so  that  there 
was  no  increase,  but,  in  fact,  a  contraction,  equal  to  the  amount  of 
reserve  the  new  banks  would  have  to  hold  of  the  old  greenbacks  ! 

Mr.  SHERMAN.  Undoubtedly  it  is  true  that  the  bajik-notes  could 
only  be  issued  as  tlie  3  per  cent,  certificates,  another  form  of  Gov- 


11 

eminent  indebtedness,  were  retired.  But,  sir,  at  the  time  the  law 
of  Mai'ch  18,  1869,  was  passed,  it  was  just  as  well  known  as  at  a  later 
period  that  these  3  per  cent,  certificates  were  a  demand  indebted- 
ness Avhicli  the  Government  was  expected  to  pay  at  its  jileasure  and 
its  will.  The  Government  could  have  paid  the  3  per  cent,  certifi- 
cates at  any  time  with  the  money  that  was  used  for  paying  the 
bonded  debt  of  the  United  States,  and  thus  have  advanced  toward  a 
specie  standard. 

Mr.  MORTON.    Tlie  Senator  was  speaking  alwnt  infiation. 

Mr.  SHERMAN.  I  am  speaking  of  the  violation  of  the  faith  we 
])lighted  at  the  earliest  practicable  i)eriod  to  pay  these  notes  in  coin. 
We  never  have  paid  a  dollar  of  them.  We  never  have  made  ijrovision 
for  the  payment  of  one  of  them.  We  have  issued  more  of  them,  and 
comjielled  the  people  to  take  them.    TJiat  is  what  I  am  getting  at. 

My  honorable  friend  asked  me  a  Avhile  ago  what  was  the  nature  of 
the  pledge  made  by  the  act  of  March,  18(59,  as  to  the  time  of  payment 
of  United  States  notes  in  coin.  If  I  was  defending  a  person  charged 
as  a  criminal  for  violating  this  law,  or  one  like  it,  I  would  claim,  as 
the  Senator  from  Indiana  does,  that  as  no  time  was  fixed  no  man  could 
be  convicted  for  a  penitentiary  offense  for  a  violation  of  the  law.  But 
what  is  this  pledge  ?    Let  me  read  it  again : 

And  the  Uiiitetl  States  also  solemnly  pledges  its  faith  to  make  jirovision  at  the 
earliest  practicable  period  for  the  papueut  of  the  United  States  notes  in  coin. 

What  is  the  meaning  of  that  I  Does  it  not  mean  tluit  the  United 
States  shall  apply  its  means,  its  power,  its  energies,  its  revenue,  its 
money,  to  redeem  these  notes  ?  Does  it  mean  a  vague  promise,  such 
as  party  platforms  sometimes  use  to  deceive  and  mislead  the  people  ? 
Does  it  mean  only  a  vague,  indefinite  promise  by  which  business  men 
are  to  be  gulled  and  dehuled  into  basing  their  contracts  upon  an  arti- 
ficial standard  'I  No,  sir ;  it  is  the  i)romise  of  a  great,  proud,  and  rich 
people,  who  mean  what  they  say — that  every  i)racticable  means  shall 
be  used  to  that  end. 

Mr.  BOUTWELL.  Unless  I  misunderstood  the  Senator,  the  idea 
which  he  seemed  to  convey  was  this,  that  instead  of  applying  the 
funds  of  the  Treasury  to  the  redemption  of  the  6  per  cent,  bonds,  they 
should  have  been  applied  to  the  redemption  of  the  3  per  cent,  certifi- 
cates. 

Mr.  SHERMAN.  Idid  not  say  whetherthe  Department  acted  wisely 
or  not ;  I  did  not  discuss  that  question ;  and  I  again  say  to  the  honora- 
ble Senator  that  I  am  not  here  at  all  to  discuss  whether  he  did  the 
best  thing  that  ought  to  have  been  done  by  paying  the  bonds  as  he 
did.  On  the  whole  the  people  are  satisfied  with  Avhat  he  did,  and  he 
will  not  dispute  that  the  itower  to  apply  the  surplus  revenue  to  the 
payment  of  these  3  per  cent,  certificates  existed  every  day  and  was  a 
peii)etual  riglit. 

Mr.  BOUTWELL.  But  in  the  light  of  history  may  I  be  allowed  to 
ask  the  Senator  Avhether  now  he  thinks  that  ought  to  have  been  done  1 

Mr.  SHERMAN.  I  hope  my  friend  will  not  press  me,  because  I 
,  might  express  some  opinions  which  would  get  up  a  controversy  as  to 
what  might  have  been  done  by  the  executive  authorities  to  advance 
our  notes  toward  a  ff^iecie  standard.  I  am  willing  to  take  my  share 
of  the  responsibility  of  results,  for  I  certainly  am  guilty  of  aiding  in 
the  passage  of  the  law  to  equalize  the  distribution  of  bank  circulation 
by  which  there  wit.s  an  increase  of  bank-notes.  I  have  no  criticisms 
to  make  upon  what  was  done  by  the  executive  autljorities.  What  I 
say  is,  that  Congress  has  not  sufticiently  kept  in  its  view  that  obli- 


12 

gation  api)roved  by  the  people  in  1868,  and  declared  by  Congress  in 
1869— that  the  United  States  would  redeem,  at  the  earliest  practicable 
period,  these  notes  in  coin. 

Now,  sir,  I  ask,  has  it  not  been  practicable  at  any  time  in  the  last 
four  years  to  advance  in  some  degree  these  notes  toward  the  specie 
standard?  My  honorable  friend  from  Indiana  says  that  for  the  last 
four  or  five  years  we  have  had  a  time  of  unbounded  plenty  and  great 
prosperity ;  we  have  built  thousands  and  tens  of  thousands  of  miles  of 
railroad ;  we  have  built  furnaces ;  we  have  expanded  our  enterprises 
and  proven  our  energy.  Yes,  sir  ;  all  this  we  have  done.  We  have 
gone  through  a  period  of  prosperity  almost  unexampled;  but  it  seems 
we  never  were  jirosperous  enougli  during  all  this  time,  according  to 
the  Senator  from  Indiana,  to  fulfill  any  part  of  this  obligation  which 
we  made  on  the  18th  of  March,  1869.  Sir,  when  Avill  it  be  practicable  ? 
Was  it  when  the  Treasury  was  ovei-flowing  and  we  were  seeking  new 
outlets,  new  modes  of  expending  money,  new  modes  of  paying  delits 
not  yet  due  ?  When  will  it  be  practicable,  according  to  the  Senator's 
construction  ?  I  jiress  that  question  upon  him,  not  for  answer  now, 
but  let  him  say  to  the  busmess  men  of  the  coinitry  Avhen  it  will  1>e 
practicable  to  restore  the  gold  standard.  If  it  cannot  be  done  in 
seasons  of  plenty,  of  prosperity,  of  overflowing  revenues,  shall  it 
be  done  in  times  of  adversity  and  trial  and  tribulation  ?  What  con- 
dition of  affairs  would  justify  us  in  redeeming  the  sacred  obligation 
which  impels  ii§  to  do  it  at  the  earliest  practicable  period  ? 

Mr.  MORTON.  If  the  Senator  will  allow  me,  I  will  ask  whether  it 
is  practicable  to  enter  upon  the  work  of  resumption  under  the  pressure 
of  a  panic,  or  whether  it  should  be  in  good  times  ? 

Mr.  SHERMAN.  Was  my  friend  from  Indiana  willing  to  do  this 
when  we  had  good  times,  and  the  Treasury  was  overflowing,  and  we 
were  paying  debts  at  the  rate  of  one  hundred  millions  a  year  ?  Was 
he  ready  a  year  ago  to  do  it,  when  an  earnest  eflbrt  was  made  in  the 
Senate  in  that  direction  ?  Can  he  state  under  what  circumstances  or 
conditions  he  will  be  ready  to  do  it  ?  I  am  of  opinion  that  at  any  time 
since  the  promise  was  made  steps  could  have  been  taken  to  have  re- 
deemed it,  and  that  now,  under  the  pressure  of  panic,  when  debts  are 
greatly  diminished,  is  a  favorable  time  for  entering,  by  decisive  meas- 
ures, upon  the  policy  of  resumption.  But  I  suppose,  according  to  the 
SenatoPs  ideas,  we  are  to  issue  more  paj)er  money,  make  more  good 
times,  start  the  ball  of  inflation,  Avith  a  view  that  some  time,  may  be, 
in  the  dim  future,  we  will  undertake  to  perform  our  promise. 

But  now  let  us  come  to  the  specific  question  of  the  time  for  resump- 
tion. Shall  the  redemption  of  this  pledge  be  postftoned  until  the 
public  debt  is  paid  ?  Why,  sir,  one-tenth  of  the  money  we  have  used 
to  pay  the  public  debt  not  due  would  have  brought  us  to  a  specie 
standard.  No  one  supposes  that  under  an  ordinary  state  of  affairs 
the  currency  of  the  country — the  greenbacks — need  be  reduced  below 
three  hundred  millions  in  order  to  bring  us  to  a  specie  standard.  I 
have  heard  some  of  the  ablest  and  most  experienced  business  men  of 
the  country  declare  that  whenever  the  right  to  convert  gieenbacks 
into  gold  or  its  equivalent  was  secured  so  that  prudent  men  would 
see  that  the  Government  had  the  power  to  maintain  its  specie  stand- 
ard, there  would  be  no  reduction  of  the  curren(?^-  to  any  appreciable 
extent.  But  whether  that  be  so  or  not,  no  one  has  claimed  that  the 
amount  of  greenbacks  need  be  reduced  below  three  hundred  millions 
in  order  to  bring  that  remaining  three  hundred  millions  up  to  the  stand- 
ard of  gold.  That  would  be  a  reduction  of  $56,000,000.  JPifty-six  mil- 
lions of  the  money  that  we  have  applied  to  the  payment  of  debt  not 


13 

yet  due  would  have  brought  all  the  remainiug  greenbacks  up  to  par  in 
gold,  would  have  ma<le  our  bank-notes  convertible  into  the  standard 
of  gold,  and  we  would  have  had,  almost  without  knowing  it,  specie 
]iayment — a  solid,  safe,  and  secure  basis.  The  forty  millions  of  green- 
backs we  paid  as  premium  for  our  bonds  would  have  accomplished 
this  result.  Thousands  of  men  who  have  been  ruined  by  the  false 
ideas  that  sprung  from  this  fever-heated,  depreciated  jiaper  money 
would  be  now  useful,  able,  and  successful  business  men,  instead  of 
being  ruined  by  bankruptcy. 

Sir,  we  gain  nothing  by  postponing  the  fulfillment  of  our  promise 
with  a  view  to  reduce  the  i)ublic  <lebt.  We  have  to  pay  the  debt  in 
coin  anyway,  and  the  same  coin  that  i)ays  it  now  would  pay  it  after 
our  currency  has  been  restored  to  ])ar.  if  the  old  idea  of  Mr.  Pendle- 
ton had  prevailed,  that  these  bonds  should  be  paid  in  greenbacks, 
then  there  would  be  a  motive  for  us  to  depreciate  the  greenbacks  in 
order  to  pay  off  our  bonds  at  the  cheapest  rate.  But  this  promise  to 
pay  in  coin  extended  to  the  bondlioldcr.  We  promised  to  pay  the 
Ijondholder  gold  for  his  bond  and  the  people  gold  for  their  green- 
backs. We  have  fulfilled  our  promise  to  the  bondlioldcr.  We  have 
paid  him  in  gold.  We  have  bought  the  gold.  We  have  i^aid  him  at 
a  premium  of  10  per  cent,  on  our  currency.  Not  a  single  effort,  not 
a  single  measure,  has  sticceeded  in  either  House  of  Congress  that  looks 
to  the  redem])tioii  of  the  x>i'oinise  to  tlie  people  who  hold  these  green- 
backs, and  which  measure  their  daily  toil  in  their  productive  avoca- 
tions. We  cannot  postpone  this  obligation  until  the  payment  of  the 
ptiblic  debt,  because,  although  we  have  rapidly  advanced  in  the  pay- 
ment of  the  public  debt,  it  will  be  many  long  years  before  that  "  con- 
summation most  devoutly  to  bo  Avished"  will  be  reached. 

Shall  we  postpone  the  redemption  of  our  greenbacks  until  we  can 
accumulate  enough  gold  in  our  Treasury  to  pay  them?  We  know  the 
effect  of  that  policy.  Any  attempt  to  accumulate  great  masses  of 
gold  in  the  Treasury  will  not  only  excite  popular  opprobrium,  by  hold- 
ing idle  in  the  vaults  of  the  Treasury  money  that  ought  to  draw  inter- 
est, but  it  will  create  a  stringency  in  the  gold  market.  Tt  will  advance 
the  value  of  the  very  thing  we  wish  to  get.  Accumulate  gold  in  great 
masses,  and  it  w'ill  advance  the  price  of  gold  all  over  the  world.  We 
could  not  noAV,  with  all  our  teeming  productions,  draw  to  this  coun- 
try $200,000,000  in  gold  without  disturbing  the  Bank  of  France,  the 
Bank  of  England,  and  all  the  money  centers  of  the  world.  Thei-efore 
the  idea  of  postponing  the  day  of  specie  payments  until  we  can  accu- 
mulate enough  gold  to  redeem  the  greenbacks  w^ould  be  the  idlest, 
vainest  delusion  and  the  most  foolish  hope. 

What  then  ?  Shall  we  postpone  the  payment  of  our  notes  in  coin, 
shall  we  put  oft"  the  fulfillment  of  our  promise  until  the  mysterious 
"  balance  of  trade  "  is  in  our  favor  ?  There  never  was  a  greater  hum- 
bug in  the  world  than  this  idea  of  the  balance  of  trade.  Why,  sir, 
the  balance  of  trade  is  now  largely  in  our  favor,  and  according  to  this 
theory  we  ought  now  to  be  ju-osperoxis,  happy,  glorious.  The  balance 
of  trade  is  iii  our  favor ;  our  exports  exceed  our  imports ;  now  we 
ought  to  be  supremely  happy.  But  a  year  ago  the  balance  of  trade 
was  $100,000,000  against  us.  We  sent  our  exports  to  Europe,  it  is 
true  ;  but  we  imported  silks  and  satins  and  wines.  All  the  luxuries 
of  the  Orient,  all  the  rich  goods  of  every  clime,  came  pouring  into  this 
country.  The  balance  of  trade  was  against  us ;  and  yet,  according 
to  the  argument  of  my  friend  from  Indiana  yesterday,  the  last  two  or 
three  years,  when  the  balance  of  trade  was  against  us,  was  a  happy 
time,  halcyon  days,  when  we  had  prosperity  in  all  branches  of  indus- 
try, and  were  building  many  thousands  of  miles  of  railroad  every  year. 


14 

Mr.  President,  this  fallacy  of  the  balance  of  trade  ought  not  to  enter 
into  the  calculations  of  prudent  men.  When  the  balance  of  trade  is 
in  our  favor,  it  indicates  tliiift  and  economy.  It  shows  we  are  ex- 
porting our  suj-jilns  products  and  getting  a  fair  jirice  for  them,  and 
taking  solid  gold  or  paying  debts  in  exchange  for  them,  instead  of 
silks  and  satins.  But  this  is  not  conclusive  evidence  that  when  we 
are  importing  more  than  we  are  exporting  we  are  necessarily  carry- 
ing on  a  losing  trade.  These  imports  may  l)e,  in  actual  wealth- 
producing  property,  such  as  capital,  machineiy,  or  the  like,  more 
valuable  to  us  than  the  burden  of  the  interest  we  pay  on  the  bal- 
ance of  trade.  The  whole  theory  depends  npon  the  nature  of  the 
imports  for  which  we  run  in  debt.  In  this  respect  the  balance  of 
traide  is  precisely  like  the  balance  of  trade  between  the  merchant  and 
the  farmer.  If  the  farmer  buys  less  than  lie  sells,  he  is  surely  on  a  safe 
footing.  If  he  buys  more  than  he  sells,  the  result  will  depend  entirely 
upon  what  he  buys,  Avhether  luxuries  consumed  in  tlie  using  or  mate- 
rials for  actual  productive  improvements  on  his  farm.  If  the  latter, 
he  is  prosperous  and  happy,  though  "the  balance  of  trade"  may  be 
against  him.  It  is  not  a  question  of  "balance  of  trade,"  but  a  ques- 
tion of  prudence  and  judgment  in  the  trade  itself.  Only  a  year  ago 
I  had  a  controversy  with  a  fellow-Senator,  who  is  now  present,  about 
this  balance  of  trade.  He  insisted  that  Avhen  the  balance  of  trade  was 
against  any  nation  it  was  an  evidence  of  decay.  I  said  this  was  a 
fallacy.  He  rejilied  that  no  countiy  could  be  prosperous  unless  the 
balance  of  trade  Avas  in  its  faAor.  I  asked  him  if  he  thought  Great 
Britain  was  a  prosperous  country,  and  he  said  it  was  a  very  prosper- 
ous country,  and  that  the  balance  of  trade  was  always  in  favor  of 
Great  Britain.  We  made  a  friendly  bet  on  the  subject,  and  it  turned 
out  that  the  balance  of  trade  was  against  Great  Britain  to  the  tune 
of  over  $300,000,000  per  annum,  and  had  been  for  twenty  years.  By 
the  fallacious  theory  of  the  "balance  of  trade"  Great  Britain  was 
on  the  high  road  to  ruin.  Yet  the  whole  of  this  balance  of  imports 
was  in  commodities  sent  to  pay  interest  on  English  investments  of  for- 
eign countries — profits  of  trade,  and  so  forth.  The  profits  of  the  trade 
were  all  in  favor  of  Great  Britain,  which  imported  raw  articles  and 
exported  high-priced  productions,  Avhile  the  balance  of  trade  only 
represented  increased  and  increasing  wealth,  instead  of  ruin  and  pov- 
erty ;  so  that  all  this  talk  abotit  the  balance  of  trade  is  the  sheerest 
humbug. 

Sir,  there  is  no  time  unfit  to  fulfill  a  sacred  oliligation,  and  there  has 
been  no  day  since  this  obligation  was  declared  by  Congress  when  we 
should  not  have  directed  our  attention  toward  redeeming  it.  The 
only  question  for  Congress  is  to  say  with  Avhat  rapidity  they  will 
advance  toward  specie  payments.  AVhen  you  tell  me  you  have  the 
right  to  choose  the  time  and  the  occasion,  I  say  you  have  done  noth- 
ing. You  have  buried  your  talent  and  are  an  unfaithful  stcAvard.  I 
ask  the  honorable  Senator  from  Indiana  Avhat  single  act  of  Congress, 
since  this  pledge  was  made,  has  even  tended  toward  specie  pa^Tuents  ? 
Let  him  look  over  the  statute-books,  examine  them  all,  and  he  will 
answer,  none.  I  have  sought  in  vain  for  any  legislation,  to  show  that 
Congress  has  been  mindful  of  this  obligation ;  I  cannot  find  a  single 
measure  that  even  tended  toward  specie  payments. 

Now,  sir,  we  are  told  that  we  are  all  for  specie  pajauents.  Even 
my  friend  who  now  occupies  the  chair  [Mr.  FerkyJ  of  Michigan] 
tells  us  lie  wants  to  issue  one  huudre<l  millions  more  of  paper  money 
to  prepare  us  for  specie  payments.     He  looks  to  specie  payments  as 


15 

the  ultimate  result  of  his  one  lumdrod  niilHons.  Wc  are  all  for 
specie  payments  some  time,  may  be.  We  are  not  in  favor  of  it  in 
times  of  plenty.  We  are  not  in  favor  of  it  in  times  of  great  i)rosperity. 
We  are  not  in  favor  of  it  in  view  of  the  panic.  When  will  we  be  in 
favor  of  it  ?  That  is  the  question  that  Senators  ouglit  to  be  prepared 
to  ansAver  to  the  business  men  of  this  country.  There  is  not  a  man 
who  buys  and  sells,  who  deals  in  exchanges,  a  banker  or  a  broker,  but 
measures  daily  the  depreciation  of  your  notes.  He  is  compelled  to 
take  them,  and  he  eagerly  asks  you,  as  you  have  promised  to  redeem 
them  at  tlie  earliest  ])ractica1)le  period,  if  you  cannot  fix  the  time,  to 
state  under  what  circumstances,  under  what  condition  of  trade, 
under  what  condition  of  plenty,  under  what  condition  of  surplus 
revenue,  you  will  jiay  tliem. 

Why,  Mr.  President,  the  very  uncertainty  of  such  an  obligation,  as 
it  is  now  construed,  would  prevent  the  richest  man  in  the  city  of  New 
York  from  borrowing  a  dollar  upon  it.  Mr.  Astor,  Avith  his  untold 
wealth,  could  not  borrow  a  thousand  dollars  of  any  gentleman  who 
now  hears  me  upon  a  promise  so  ^ague  and  indefinite  as  you  seek  to 
make  this.  And  yet  the  people  of  this  country  have  been  compelled 
to  submit  to  a  forced  loan,  and  the  business  men  of  this  country  are 
compelled  to  take  such  pa^^er  as  the  standard  of  their  values  and  of 
all  values,  wlien  no  living  man  can  guess  the  time  when,  or  the  cir- 
cumstances under  which,  this  promise  will  be  redeemed. 

I  say,  therefore,  that  if  the  ideas  of  these  gentlemen  are  to  prevail 
in  the  Senate,  they  ought  to  tell  the  country  when  and  under  what 
circumstances  they  will  redeem  this  promise.  I  say  to  Senators  that 
if  now,  in  this  time  of  temporary  panic,  a  great  ijaii;  of  which,  as  I 
shall  show  you,  has  already  passtnl  over,  we  yield  one  single  inch  to 
the  desire  for  paper  money  in  this  country,  we  shall  iiass  the  Rubicon, 
and  there  will  l)e  no  power  in  Congress  to  check  the  issue.  If  you 
want  forty  millions  now,  how  easy  will  it  be  to  get  forty  millions 
again  ?  If  you  want  one  hundred  millions  now,  convertible  into  three 
sixty-five  currency  bonds,  how  soon  will  you  want  one  hundred  mil- 
lions more  ?  Will  there  not  always  l>e  men  in  debt  f  Will  not  always 
men  with  bright  hopes  embark  too  far  on  the  treacherous  sea  of 
credit  ?  Will  there  not  always  be  a  demand  made  upon  you  for  an 
increase  ?  And  when  yon  have  passed  the  Rubicon  and  have  fulfilled, 
the  pledges  you  have  already  made  to  the  people  of  the  United  States, 
where  can  you  stop  f  Where  our  ancestors  stopped  at  the  close  of 
the  Revolution;  where  the  French  people  stopped  in  the  midst  of 
their  revolutionary  fervor ! 

Sir,  I  regard  it  as  the  proudest  achievement  of  the  American  people 
that  so  soon  after  the  war  they  so  faithfully  and  honorablj'  redeemed 
their  obligation  to  the  bondholder.  I  denjand  the  same  honorable 
fulfillment  of  your  promise  to  the  note-holder.  Now  is  the  time  to 
make  the  stand,  not  only  to  prevent  any  further  violation  of  law  and 
of  our  promise,  but  to  retrace  our  steps  and  to  give  some  decisive 
token  that  you  will  pay  our  paper  money  in  coin,  as  we  agreed  to  do. 

This  is  all  I  desire  to  say  in  regard  to  this  pledge  of  the  public  faith. 
But  I  wish  to  go  a  little  further.  I  wish  to  show  you  that  the  policy 
of  the  country,  adopted  at  the  tinu^  these  notes  were  issued,  contem- 
plated that  they  should  be  maintiunf^d  at  par  in  gold ;  that  that  policy 
was  only  temporarily  abandoned  iinder  the  jiressure  of  war.  The  act 
of  February  ^5,  1862,  is  the  fundamental  constitution  of  our  pres- 
ent financial  system.  It  was  passed  after  the  greatest  deliberation 
in  both  Houses  of  Congress.  It  contains  every  principle  and  element 
of  our  whole  financial  system.    There  is  not  a'u  idea  advanced  dxiring 


16 

the  war  tliat  operated  successfully  that  is  not  coiituined  in  the  act  of 
FebruaiySS,  lts62.  That  act  provided  for  the  issue  of  live-twenty  bonds; 
it  provided  for  the  issue  of  the  greenbacks ;  it  provided  for  the  issue 
of  certificates  of  indebtedness ;  it  provided  that  your  internal  taxes 
be  paid  in  jiaper  money  and  that  your  duties  should  l)e  paid  in  gold; 
it  established  your  sinking  fund ;  it  secured  the  interest  on  the 
public  debt  always  to  be  paid  in  coin  ;  it  set  aside  the  coin  from  cus- 
toms-duty to  pay  it^  That  act  provided  that  the  greenbacks  issued 
under  it  should  be  maintained  as  near  at  par  in  gold  as  possible  dur- 
ing the  war,  but  at  all  events  at  par  with  the  best  bond  that  could  be 
issued  by  the  Government  of  the  United  States. 

Mr.  HOWE.  That  was  the  act  that  made  the  note  convertible  into 
a  bond  ? 

Mr.  SHERMAN.  Yes,  sir.  I  will  ask  the  Secretary  to  read  the 
stipulations  that  were  nuide  in  regard  to  these  notes.  They  will  show 
how  sacredly  they  were  regarded  and  hoAV  carefully  their  security  was 
watched. 

The  Chief  Clerk  read  as  follows  : 

And  such  notes  herein  authorized  shall  be  recoivahle  iu  payment  of  all  taxes,  in- 
ternal duties,  excises,  debts,  and  demands  of  every  kin<l  dne'to  the  Unitod  States, 
except  duties  on  imports,  and  of  all  claims  and  demands  against  the  United  States 
of  every  kind  whatsoever,  except  for  iiitei'est  upon  bonds  and  notes,  which  shall  be 
paid  in  coin,  and  shall  also  be  lawful  money  aud  a  legal  t(uidt!r  in  payment  of  all 
debts,  public  and  private,  within  the  United  States,  excejit  duties  on  im))0it8  and 
interest  as  aforejiaid.  And  any  holders  of  said  United  States  notes  depositing  any 
sum  not  less  than  fifty  dollars,  or  some  luultiiile  of  lifty  dollais.  with  the  Treasurer 
of  the  United  States,  or  either  of  the  assistant  treasui-ers,  shall  receive  in  exchange 
therefor  duplicate  certificates  of  de])osit,  one  of  which  may  be  transmitted  to  the 
Secretary  of  the  Treasmy,  who  shall  thereupon  issue  to  tlie  h<dder  an  equal  amount 
of  bonds  of  the  United  States,  coupon  or  registered,  as  may  by  said  holdei'  be  de- 
sired, bearing  interest  at  the  rate  of  6  per  cent,  per  annum,  j)ayable  semi-annuallv, 
and  redeemable  at  the  pleasure  of  the  United  States  after  five  years,  and  payable 
twenty  years  from  the  date  thereof.  And  such  United  States  notes  shall  be  received 
,  the  same  as  coin,  at  their  par  value,  in  payment  for  any  loans  that  mav  be  hereafter 
sold  or  negotiated  by  the  Secretary  of  the  Treasury,  aiul  be  reissued  fi-om  time  to 
time  as  the  exigencies  of  the  iniblic  intei'ests  shall  require. 

Mr.  SHERMAN.  I  have  had  this  clause  read  to  show  you  that  the 
foundation  of  the  greenback  was  coin.  Although  it  could  not  at  the 
moment,  during  the  war,  be  converted  into  coin — for  the  wants  of  the 
Government  were  greater  than  all  the  coin  of  the  United  States,  or 
•perhaps  than  all  the  coin  of  the  world,  attainable  during  war — yet  the 
Government  based  the  whole  upon  coin.  Every  bond  that  was  issued 
was  issued  only  uiion  the  sacred  pledge  contained  in  this  act  that  the 
interest  of  that  bond  should  be  paid  in  coin ;  and  the  principal  should 
be  paid,  w  hen  due,  in  coin.  The  fifth  section  of  the  act  i)rovide8  that 
all  duties  on  imported  goods  shall  be  paid  in  coin ;  and  that  this  money 
shall  be  set  aside  as  a  siiecial  fund  to  pay  the  interest  on  the  bonded 
debt  in  coin.  Then,  in  order  to  secure  the  greenbacks,  it  authorized 
any  holder  of  a  greenback  to  pay  any  Government  debt  Avith  them ; 
it  authorized  the  holder  of  a  greenback  to  j)ay  any  debt,  public  or 
private,  with  them ;  and  every  citizen  of  the  United  States  was  bound 
to  take  them.  Then  it  authorized  them  to  be  converted  into  "6  per 
■  cent,  bonds  of  the  United  States — those  bonds  payable,  principal  and 
interest,  in  gold.  If  the  policy  jjrovided  for  by  this  act  had  been  main- 
tained, we  would  long  since  have  been  at  specie  payments,  without 
any  serious  disturbance  of  our  monetary  aft'atrs. 

Mr.  MORTON.  If  the  Senator  will  allow  me  to  ask  him  a  question 
right  there,  I  will  ask  him  what  act  or  determination  of  the  Govern- 
ment it  was  that  inflicted  the  greatest  dishonor  upon  the  greenback, 
that  contributed  more 'than  anything  else  to  its  dishonor,  if  it  has 
been  dishonored  f 


17 

Mr.  SHERMAN.  As  I  sliall  refer  to  all  the  acts  that  relate  to  the 
greenbacks,  I  shall  no  doubt  come  to  the  one  that  the  Senator  would 
pick  out.    He  can  take  his  choice. 

Now,  Mr.  President,  I  come  to  show  the  Senate  how  this  provision, 
the  convertible  clause  of  the  act  of  February  25,  1862,  was  repealed. 
On  the  3d  of  March,  1863,  Congress  passed  "An  act  to  provide  ways 
and  means  for  the  support  of  the  Government."  This  act  was  passed 
diiring  the  dark  hours  of  the  war.  The  currency  of  the  country  did 
not  flow  into  the  Treasury  rapidly  enough  to  pay  our  Army.  I  re- 
member that  at  about  the  time  this  act  was  passed  there  were  very 
large  unpaid  requisitions.  The  Secretary  of  the  Treasury,  instead  of 
issuing  any  more  6  per  cent,  bonds,  desired  to  float  a  ten-forty  5  per 
cent,  bond;  in  other  words,  to  reduce  the  burden  of  interest  upon  the 
public  debt.  At  this  time  there  were  three  huncb'ed  millions  of  cir- 
culation outstanding,  and  with  all  the  rights  and  all  the  privileges 
conferred  upon  the  greenbacks,  they  did  not  flow  into  the  Treasury 
fast  enough  to  furnish  means  to  carry  on  the  operations  of  the  war. 
The  Secretary  reasoned  somewhat  in  this  way:  he  said  thatthe  holder 
of  greenbacks  had  the  right  to  convert  them  at  any  time  into  bonds 
bearing  6  per  cent,  interest ;  but  as  that  right  could  be  exercised  at 
any  time,  the  people  were  apt  to  postpone  the  exercise  of  it,  and  he 
believed  it  would  advance  the  conversion  of  these  notes  into  bonds 
by  taking  away  the  absolute  legal  right  to  convert.  In  other  words, 
the  suspension  of  this  convertibility  clause  was  passed  with  a  view  to 
promote  conversion ;  to  encourage  conversion  ;  to  induce  conversion  ; 
and,  if  possible,  to  iiuluce  a  conversion  into  a  5  per  cent,  gold  bond 
instead  of  into  a  6  per  cent.  bond.  When  the  Secretary  of  the  Treas- 
ury presented  this  view  to  Congress  he  was  at  once  met  with  the  pledge 
of  the  public  faith ;  with  the  promise  printed  upon  the  back  of  the 
greenbacks  that  they  could  be  converted  into  6  per  cent,  bonds  at  the 
pleasure  of  the  liolder;  and  that  we  could  not  take  away  that  right. 
This  difficulty  was  met  by  the  ingenuity  of  the  then  Senator  from  Ver- 
mont, (Mr.  CoUamer. )  He  said  that  no  man  ever  exercised  a  right  which 
could  not  properly  be  barred  by  a  statute  of  limitations  ;  and  if  this 
right  was  injurious  to  the  people  of  the  United  States,  and  prevented 
the  conversion  of  these  notes  into  bonds,  we  might  require  the  holder 
of  these  notes  to  convert  them  within  a  given  time  ;  that  we  could 
give  them  a  reasonable  time  within  which  they  could  convert  them 
into  6  per  cent,  bonds,  and  after  that  take  away  the  right. 

The  act  of  March  3, 1863,  was  amended  by  inserting  this  clause : 

And  the  holders  of  United  States  notes,  issued  under  or  by  virtne  of  said  acts, 
shall  present  the  same  for  tlie  purpose  of  exclianging  the  same  for  bonds  as  therein 
provided  on  or  before  the  Ist  day  of  July,  18C3  ;  and  thereaiter  the  right  so  to  ex- 
thauge  the  same  shall  cease  and  determine. 

In  reviewing  the  history  of  our  times  I  am  not  sure  but  that  in  this 
we  made  a  mistake.  I  am  not  sure  but  that  itwouldhave  been  better 
to  submit  to  any  sacrifice  rather  than  palter  with  the  public  faith.  If 
there  was  any  wrong  done  by  Congress  at  that  time,  I  am  willing  to 
share  the  responsibility  of  it,  although  I  felt  at  the  time  the  danger 
of  the  measure.  But,  sir,  iiudtr  the  pressure  of  war  we  coTild  not 
consider  as  carefully  as  we  can  now  all  the  obligations  that  rest 
upon  us.  The  life  of  our  country  was  at  stake;  every  man's  property 
was  felt  to  be  insecure  if  the  Union  was  destroyed  ;  everything  was 
at  stake  ;  and  we  did  a  great  many  things  in  those  times  of  peril  and 
excitement  aiul  trial  we  would  not  hke  to  do  now.  Thousands  of 
men  rushed  to  the  battle-field  and  surrendered  their  lives ;  others 

2 


18 

gave  up  their  property ;  mothers  their  childi-en.  There  were  acts  of 
heroism  done  at  those  times,  and  sometimes  acts  of  wrong. 

I  am  willing  to  take  my  share  of  the  responsibility  of  the  passage 
of  this  act;  but  casuists  and  theorists  can  demonstrate  very  easily 
that  in  this  very  act  we  laid  the  foundation  of  the  long  delay  in  the 
return  to  a  specie  standard.  If  the  right  to  convert  greenbacks  into 
bonds  had  been  retained  as  the  permanent  policy  of  the  country 
during  the  war,  then  no  man  would  have  been  bold  enough  or  bad 
enongh  to  take  that  provision  away  in  time  of  peace.  But  mark,  sir, 
while  the  legal  right  to  convert  notes  into  bonds  was  taken  away, 
no  one  contemplated  a  denial  of  the  actual  conversion.  The  notes 
were  still  received  par  for  par  for  bonds  during  the  war  and  after 
the  war  was  over.  The  right  to  convert  them  into  a  particular 
form  of  bonds,  that  is,  the  five-twenties,  was  denied;  still  tliey  were 
converted  at  par  into  seven  and  three-tenths  Treasury  note«,  into 
ten-forty  gold  bonds,  and  into  every  form  of  security  except  only 
the  five-twenties.  So  that  although  we  repealed  the  technical  right 
to  convert  after  a  given  time  those  notes  into  one  class  of  bonds,  we 
never  did  deny  in  practice  the  rigtit  to  convert  them  into  some  form 
of  interest-bearing  security. 

After  the  passage  of  the  act  of  March  3,  1863,  Secretary  Chase  be- 
lieved that  he  could  negotiate  a  ten-forty  loau,  and  he  tried  to  do 
it.  One  hundred  million  dollars  were  taken,  and  they  were  taken 
by  the  conversion  of  these  notes,  being  received  at  par.  Afterward 
we  issued  |830,000,000  of  three-year  Treasury  notes  bearing  7.3  per 
cent,  currency  interest,  and  when  due  convertible  iuto  G  per  cent, 
bonds  ;  and  they  were  sold  at  par  in  greenbacks.  So  that  althongli 
the  legal  option  of  the  note-holder  to  convert  was  taken  away,  yet  in 
fact  his  right  to  convert  existed  except  as  to  the  five-twenty  bonds. 
Dirring  the  war,  and  up  until  186(5,  there  was  no  hour  when  any  holder 
of  greenbacks  could  not  present  them  to  the  Treasury  of  the  United 
States,  or  to  any  banker  or  broker,  and  buy  some  form  of  United 
States  interest-bearing  security  at  par. 

After  the  passage  of  this  act  the  five-twenties  began  to  rise  above 
par  in  currency.  Then  the  measure  of  the  value  of  the  greenback 
was  the  ten-forty  bond.  When  the  Government  again  coumienced  issu- 
ing currency  securities,  seven  and  three-tenths  notes,  fearing  to  issue 
a  larger  amount  of  gold-bearing  bonds,  the  gi-eenbacks  were  allowed 
to  be  received  at  par  for  them. 

Now,  Mr.  President,  I  have  shown  you  that  the  greenbacks  were 
based  upon  coin  bt)nds ;  that  they  had  the  right  to  be  converted  into 
coin  bonds;  that  that  right  was  taken  awayas  to  the  five-twenty  bonds; 
but  that,  in  practice  and  in  effect,  the  greenback  was  convertible  into 
an  interest-beai'ing  bond  of  the  United  States  up  to  18(56,  and  until 
the  passage  of  the  law  to  which  I  will  now  refer. 

My  friend  from  Indiana  [Mi*.  Morton]  inquires  what  law  is  the 
worst  of  all  the  laws  we  have  passed  in  relation  to  the  greenback. 

Mr.  MORTON.  I  did  not  say  " law;"  I  said  "what  act  of  the  Gov- 
ernment." • 

Mr.  SHERMAN.  In  my  judgmt^nt  more  evil  effects  have  resulted 
from  the  "act  of  the  Government"  passed  on  tlie  12th  of  April,  lS6t), 
than  from  any  other  act  that  was  ever  passed  in  regard  to  our  financial 
system.     Indeed,  it  is  the  only  one  that  I  desire  to  criticise. 

Mr.  President,  what  was  the  conditi<m  of  affairs  when  the  war  was 
over!  We  had  then  outstanding  every  form  of  liability.  We  had 
6  per  cent,  bonds ;  we  had  5  per  cent,  bonds ;  we  had  seven-thirty  bonds ; 
we  hsul  certificates  of  indebteihiess ;  we  had  two  or  three  issues  of  green- 


19 

back  notes ;  we  had  eight  or  ten  difterent  forms  of  Government  securi- 
ties. Then  it  was  that  Congress  was  called  upon  to  make  provision 
for  funding  this  debt.  At  that  time  there  was  a  large  circulation ; 
there  were  some  forms  of  interest-bearing  notes  that  were  a  legal 
tender  for  the  principal ;  we  had  almost  every  class  of  securities.  The 
act  of  the  Government  which  was  most  injurious  to  the  public  credit 
was  an  act  of  omission  and  not  an  act  of  commission.  If  in  the  first 
session  of  Congress  during  Andrew  Johnson's  administration  we  could 
have  passed  a  funding  bill  authorizinganyholderof  any  form  of  Govern- 
ment security  to  convert  them  into  a  5  per  cent,  bond,  all  the  evils  that 
have  flowed  out  of  our  disordered  currency  would  have  passed  away; 
the  questions  that  afterward  were  raised  that  endangered  the  pub- 
lic credit  never  avouM  have  arisen;  all  this  long  agony  of  doing  what 
we  have  promised  to  do,  and  never  performing  it,  would  have  been 
avoided.  If  in  December,  1865,  after  our  soldiers  had  returned  to  their 
homes  and  the  war  was  over,  we  had  authorized  any  holder  of  any 
form  of  security,  greenback  or  bond,  to  convert  it  at  his  pleasure,  at 
his  will,  into  some  proper  security  of  the  United  States,  say  a  5  per 
cent,  bond,  there  would  have  been  no  difficulty.  The  condition  of  the 
public  credit,  the  advancing  credit  of  tlie  nation,  the  triumph  of  our 
arms,  all  causes  co-operated  ;  but,  sir,  it  could  not  be  done.  At  that 
time  came  up  the  controversy  between  the  President  of  the  United 
States  and  Congress,  and  the  fierce  and  angry  passions  that  it  excited, 
the  eager  debates,  the  bitter  excitement,  the  quasi  civil  war  that  ex- 
isted, prevented  any  consideration  of  our  finances.  Eft'orts  were  made 
at  that  time  to  pass  some  ])roper  funding  bill,  but  it  was  impossible 
to  get  public  attention  attracted  to  it.  Congress  would  not  look  at 
it.  Finally,  after  a  debate  of  not  over  an  hour  in  the  Senate,  and  a 
short  debate  in  the  House,  the  act  of  April  12,  1866,  was  passed,  con- 
ferring upon  the  Secretary  of  the  Treasury  a  power  that  was  never 
conferred  ui>on  mortal  man  liefore.  I  will  ask  the  Secretary  to  read 
that  act. 
The  Chief  Clerk  read  as  follows : 

An  act  to  amend  an  act  entitled  "An  act  to  provide  way.s  and  means  to  support  the 
Government,"  approved  March  3,  1865. 

Be  it  enacted  by  the  Senate  and  Hovse  of  Representatives  of  the  United  States  of 
America  in  Congress  assembled,  Xhat  tlie  act  entitled  "An  act  to  provide  ways  and 
means  to  suppoi-t  the  Government,"  api)roved  March  3,  1865,  shall  be  extended  and 
construed  to  authorize  the  Secretary  of  the  Treasury,  at  his  discretion,  to  receive 
any  Treasuiy  notes  or  other  obligations  issued  under  any  act  of  Congress,  whetlier 
bearing  interest  or  not,  in  exchange  for  any  description  of  bonds  authorized  by  the 
act  to  wliitdi  this  is  an  amendment;  and  also  to  dispose  of  any  <lascription  of  bonds 
authorized  by  said  act,  either  in  the  United  States  or  elsewhere,  to  such  an  anioxuit, 
in  such  manner,  and  at  such  rates  as  he  may  think  advisable,  for  lawful  money  of 
the  United  States,  or  for  any  Treasury  notes,  certificates  of  indebtedness,  or  certifi- 
cates of  deposit,  or  other  representatives  of  value,  which  have  been  or  which  may 
be  issued  under  any  act  of  Conjn-ess,  the  proceeds  thereof  to  be  used  only  for  retir- 
ing Treasury  notes  or  other  obligations  issued  under  any  act  of  Congress ;  but 
nothing  herein  contained  shall  be  construed  to  authoi-ize  any  increase  of  the  public 
debt:  Provided,  That  of  United  States  notes  not  more  than  |10, OCX), 000  may  be  re- 
tired and  canceltul  within  six  months  from  the  passage  of  this  act,  and  thereafter 
not  more  than  |4. 000,000  in  any  one  month:  And  provided  further,  That  the  act  to 
which  this  is  an  amendment  shall  continue  in  full  force  in  all  its  provisions,  except 
as  modified  by  this  act. 

Sec.  2.  And  be  it  further  enacted,  That  the  Secretary  of  the  Treasury  shall  re- 
port to  Congress  at  the  connnencement  of  the  next  session  the  amount  of  ex- 
changes made  or  money  borrowed  under  this  act,  and  of  whom,  and  on  what  terms; 
and  also  the  amount  and  character  of  indebtedness  retired  under  this  act  and  the 
act  to  which  this  is  an  amendment,  with  a  detailed  statement  of  the  expense  of 
making  such  loans  and  exchanges. 

Mr.  SHEKMAN.  Under  the  enormous  powers  conferred  by  this  act 
the  Secretary  of  the  Treasury,  Mr.  McCulloch,  adopted  what  is  called 
the  contraction  policy ;  that  is,  he  authorized  the  funding  of  all  forms 


20 

of  interest-bearing  securities  into  6  per  cent,  gold  bonds  of  the  Unite«l 
States,  while  he  proposed  to  raise  the  greenback  up  to  par  in  gold  by 
contracting  it  by  gradual  stages  limited  by  the  law.  This  act,  and  the 
very  flrst  thing  done  under  this  act,  separated  forever  the  gold  bonds 
of  the  United  States  from  the  legal- tenders,  and  abandoned  all  idea 
of  the  power,  the  right,  and  the  practice  to  convert  the  greenback 
into  a  bond.  I  remember  that  the  honorable  Senator  from  Michigan 
[Mr.  Chandler]  and  I  tried  to  jirevent  the  passage  of  this  law.  We 
tried  hard  to  do  it,  and  to  excite  public  attention  to  it,  bvit  we  could 
not.  Everybody  was  then  fighting  Andrew  Johnson.  And  so,  sii-, 
this  law  was  passed  after  a  brief  debate,  and  all  this  enormous  power 
was  conferred  upon  the  Secretary  of  the  Treasury.  The  law  did  not 
even  stipulate  what  bond  it  should  be,  whether  it  should  be  a  forty 
or  twenty  year  bond,  or  whether  it  should  run  five  years.  The  only 
limitation  'was  that  the  rate  of  interest  on  the  gold  bond  should  not 
be  over  6  per  cent.,  but  no  duration  as  to  time  was  prescribed.  Under 
thtit  act  the  Secretary  funded  the  Treasury  notes,  and  all  the  various 
forms  of  interest-bearing  notes,  into  6  per  cent,  bonds,  swelling  the 
amount  of  our  6  per  cent,  bonds  from  about  $700,000,000  to  about 
$1,600,000,000.  All  the  Treasury  notes  payable  in  currency  were  con- 
verted into  6  per  cent,  gold  bonds,  and  the  money  of  the  people,  the 
greenbacks,  were  left  to  be  canceled  and  retired  under  the  last  clause 
of  the  act,  which  authorized  the  Secretary  to  cancel  $10,000,000  by  a 
certain  time,  and  $4,000,000  a  month  afterward.  Thus  the  bond- 
holder was  provided  for,  and  the  note-holder  was  left  without  any 
legal  right  except  a  naked  promise  to  pay  in  the  indefinite  future. 

If  this  act  hatl  contained  a  simple  provision  restoring  to  the  holder 
of  the  greenback  the  right  to  convert  his  note  into  bonds  there  would 
have  been  no  trouble.  Why  should  it  not  have  been  done  ?  Simply 
because  the  then  Secretary  of  the  Treasury  believed  that  the  only 
way  to  advance  the  greenbacks  was  by  reducing  the  amount  of  them ; 
that  the  only  way  to  get  back  to  specie  payments  was  by  the  system 
of  contraction.  If  the  legal-tender  not«s  could  have  been  wedded  to 
any  form  of  gold  bond  by  being  made  convertible  into  it,  they  would 
have  been  lifted  by  the  gradual  advance  of  our  public  credit  to  par 
in  gold,  leaving  the  question  of  contraction  to  depend  upon  the  amount 
of  notes  needed  for  currency.  Sir,  it  was  the  separation  of  our  green- 
backs from  the  funding  system  that  created  the  difficulty  we  have 
upon  our  hands  to-day ;  and  I  say  now  that,  in  my  judgment,  the  only 
true  way  to  approach  specie  payments  is  to  restore  this  princiiile,  and 
give  to  the  holder  of  the  greenback,  who  is  your  creditor,  the  same 
right  that  you  give  to  any  other  creditor.  If  he  has  a  note  which 
you  promised  to  pay  and  cannot,  and  he  desires  interest  on  that  note 
by  surrendering  it,  why  should  you  not  give  it  to  him  ?  No  man  can 
answer  that.  It  is  just  as  much  a  debt  as  any  other  portion  of  the 
debt  of  the  United  States. 

Mr.  MORTON.  If  my  friend  will  allow  me,  I  think  he  has  not  prop- 
erly answered  the  question  which  I  put  to  him,  as  to  what  act  of  the 
Government  had  most  dishonored  the  greenback. 

Mr.  SHERMAN.  It  is  not  very  parliamentary  to  be  putting  ques- 
tions to  me  and  leading  me  off  from  the  course  of  my  argument ;  but 
if  the  Senator  will  tell  me  what  he  is  driving  at,  I  will  answer  him. 

Mr.  MORTON.  If  my  friend  will  allow  me,  I  suggest  that  the  act 
of  the  Government  that  I  think  did  more  to  depreciate  the  greenback 
currency  than  any  other,  and  has  cost  this  Government  more  than 
any  other,  is  this  declaration,  to  be  found  on  the  back  of  the  note: 

This  note  is  alegal  tender  at  its  face  value  for  all  debts,  public  and  private,  except 
duties  on  imports  and  interest  on  the  public  debt. 


21 

My  friend  made  a  report  as  chairmau  of  the  Committee  on  Finance 
in  1866,  oftering  an  irresistible  argument  that  this  note  meant  just 
what  it  says,  that  these  notes  were  a  legal  tender  in  payment  of  the 
five-twenty  bonds,  for  the  bonds  were  bought  from  the  Government 
with  these  very  notes.  That  argument  ha Jnever  been  answered.  But 
when  the  Government  denied  this  property  in  the  legal-tender  notes, 
it  thereby  gave  them  a  permanent  Jdepreciation.  They  would  have 
been  at  par  live  or  six  years  ago  but  for  that  act. 

Mr.  SHERMAN.     What  act  is  that  ? 

Mr.  MORTON.  The  determination  upon  the  part  of  the  Govern- 
ment that  this  langTiage  did  not  mean  what  it  says. 

Mr.  ALLISON.     You  refer  to  the  act  of  1869. 

Mr.  MORTON.  That  act  simply  followed  a  determination  that  the 
Government  had  acted  upou  for  some  four  or  five  years.  That  act 
was  simply  carrying  it  out.  But  the  declaration,  made  before  the 
war  was  over,  that  that  language  did  not  mean  what  it  says,  and  that 
the  Government  could  not  use  those  notes  in  taking  up  the  very  bonds 
which  were  bought  with  them,  in  plain  violation  of  the  language  and 
of  the  argument  made  by  the  Senator  himself — I  say  that  that  de- 
termination has  cost  this  Government  more  than  any  other  blunder 
that  ever  was  committed  in  regard  to  our  finances.  But  for  that  these 
notes  would  have  been  at  par  years  ago,  millions  of  dollars  would 
have  been  saved,  and  more  of  our  public  debt  would  have  been  paid 
off  than  is  now  paid. 

Mr.  SHERMAN.  I  do  not  know  for  the  life  of  me  what  the  Senator 
from  Indiana  is  diiving  at.  Does  he  wish  to  say  that  the  act  of 
March  18,  1869  is  wrong — an  act  of  bad  policy  ?  If  he  does,  I  under- 
stand him. 

Mr.  MORTON.  I  am  merely  stating  the  position  my  friend  took  in 
his  report  in  1866  in  regard  to  the  eft'ect  of  that  language.  I  am  not 
quarreling  with  the  act  of  1869.  When  it  was  passed  I  acquiesced  in 
it,  and  it  is  gone. 

Mr.  SHERMAN.  I  did  make  a  report  upon  the  act  of  1866.  I  did 
make  an  earnest  appeal  to  Congress  to  restore  to  the  greenback  the 
right  that  had  been  taken  away  from  it  during  the  war — the  right  to 
be  converted  into  a  bond.  I  stand  there  now,  and  I  will  stand  there 
until  every  dollar  of  this  debt  is  redeemed. 

Mr.  MORTON.  My  friend's  aigument  iu  that  report  was  that  the 
Government  had  a  right  to  use  these  greenbacks  in  the  i)ayment  of 
those  bonds. 

Mr.  SHERMAN.  I  insisted  that  they  were  convertible  one  into  the 
other ;  that  although  the  authority  to  convert  a  greenback  into  a  five- 
twenty  bond  was  repealed  by  the  act  of  March  3, 1863,  still  in  fact  and 
in  law  the  holder  of  a  greenback  had  a  right  under  the  legal-tender 
clause  to  convert  it  into  a  bond.  I  stand  there  now,  and  there  is  where 
I  wish  the  Senator  from  Indiana  would  stand  with  me.  If  he  desires 
to  make  a  tilt  at  the  act  of  March  18,  1869,  why  does  he  not  do  it 
squarely  and  openly  ?  Did  he  oppose  it  or  resist  ?  It  is  a  pledge  of 
the  public  faith ;  and  I  call  upon  him  to  aid  me  in  carrying  out  that 
obligation. 

Mr.  MORTON.     I  agree  that  the  Government  is  now  bound  by  it. 

Mr.  SHERMAN.  Very  well ;  then  I  call  upon  him  to  aid  me  to 
caiTy  it  out.  We  have  made  the  ^iromise,  whether  wisely  or  not  it  is 
not  for  us  to  inquire. 

Mr.  MORTON.  The  act  of  1867  does  not  touch  this  question  at  all 
in  regard  to  paying  the  greenbacks  in  coin ;  we  were  always  bound 
to  do  that ;  but  the  argument  of  my  friend  in  1866  was  that  the  Gov- 

d 


22 

emment  liad  a  right  to  issue  the  greenbacks  in  payment  of  five- 
twenties,  and  the  fact  that  the  Government  came  to  a  different 
conclusion  before  the  war  was  over  did  more  to  depreciate  the  gieeu- 
backs  than  any  other  act  that  has  ever  been  performed  by  the 
Government,  and  has  cost  tHis  Government  more  ;  and  but  for  that 
we  shouhl  have  had  specie  payments  long  ago. 

Mr.  SHERMAN.  I  always  insisted  that  it  was  the  duty  of  the  Gov- 
ernment to  redeem  this  broken  promise  by  making  the  note  equal  to 
par  in  gold  before  attempting  to  force  it  on  anybody  in  pajTuent  of  a 
bond.  The  Senator  should  see  that  we  had  no  right  to  compel  any 
holder  of  a  bond  to  take  a  greenback  iu  payment  of  his  bond  until 
we  complied  with  that  obligation  which  we  assumed,  long,  long  ago, 
to  make  it  equal  to  par  iu  gold.  Then  it  would  be  a  matter  of  in- 
difference whether  a  greenback  or  gold  was  paid.  But,  sir,  it  was 
the  act  of  March  18,  1869,  that  settled  all  this  controversy  about  the 
obligation  of  the  Government  to  the  holders  of  the  greenback  and 
the  bond ;  and  it  is  that  act  of  which  he  acknowledges  the  binding 
force,  that  I  ask  Jjim  to  carry  out. 

By  the  act  of  1866  $10,000,000  of  greenbacks  were  to  be  retired  in 
six  months  and  canceled,  and  $4,000,000  every  month  thereafter. 
Such  progress  was  made  under  the  operation  of  the  act  that  within 
less  than  two  years  $44,000,000  of  these  notes  had  been  retired  and 
canceled  in  pursuance  of  the  contraction  policy. 

Mr.  ALLISON.  If  I  may  interrupt  the  Senator,  I  desire  to  ask,  was 
not  that  act  repealed  in  1868  ? 

Mr.  SHERMAN.  It  was  suspended  ;  and  the  Secretary  could  not 
cancel  any  more  notes  after  the  passage  of  the  act  of  1868.  I  have  it 
here  before  me.  The  authority  to  retire  and  cancel  greenbacks  Avas 
suspended ;  but  I  ask  the  Senator  from  Iowa  whether  that  revives 
into  life  and  being  the  $44,000,000  that  were  retired  and  canceled 
under  the  law  ? 

Mr.  ALLISON.  I  only  desire  to  call  the  Senator's  attention  to  a 
part  of  the  history  of  the  withdrawal  of  these  greenbacks.  The 
then  Secretarj^  of  the  Treasury,  instead  of  following  out  the  spirit 
and  letter  of  the  law,  which  was  that  $4,000,000  per  month  should  be 
withdrawn,  allowed  four  or  five  months  of  the  jtlethoric  time  of  1867 
to  pass  away  without  withdrawing  a  single  dollar  of  greenbacks, 
and  when  the  months  of  September  and  October  of  1867  came,  when 
it  was  necessary  to  use  a  large  amount  of  money  in  the  Western  States 
for  the  forwartUng  of  the  crops,  the  Secretary  of  the  Treasury  then 
reduced  the  greenback  circulation  $16,000,000  in  two  months;  thus 
contracting  the  currency,  instead  of  .$4,000,000  a  month,  $16,000,000' 
in  two  months,  so  that  Avhen  Congress  came  together  in  December, 
1867,  they  withdrew  from  the  Secretary  of  the  Treasury  the  power  which 
they  believed  he  had  abu.sed;  and  from  that  time  until  now  no  Con- 
gress has  ever  authorized  the  withdrawal  or  the  reduction  of  the  cir- 
culation of  the  greenback  currency.    Am  I  not  right f 

Mr.  SHERMAN.  I  do  not  differ  with  the  Senator  from  loAva;  but 
I  do  not  see  what  that  has  to  do  with  my  argument. 

Mr.  ALLISON.  It  has  this  to  do  Avith  the  argument,  that  the 
policy  of  returning  to  specie  payments  in  1866,  by  the  law  of  1866^ 
was  reversed  in  1868,  by  an  act  of  Congress,  and  has  never  been, 
resumed. 

Mr.  SHERMAN.  And  to  that  act  T  heartily  assented.  I  do  not 
doubt  at  all  that  the  policy  of  getting  to  specie  payments  by  a  con- 
traction of  the  currency  in  the  way  that  was  proi>osed  was  a  very 
unwise  one.     I  aided  in  its  repeal.     But  that  is  not  the  point.     When. 


23 

ill  .1869  we  pledged  tlie  pi'.l)l:c  faitli  to  redeem  our  outstanding  paper 
in  coin,  the  only  amount  tliat  then  legally  existed,  or  which  there 
was  any  authority  to  issue,  was  the  |356,000,0()0,  to  which  amount, 
by  the  policy  of  the  law  of  1866,  the  currency  had  been  reduced 
when  that  reduction  was  suspended.  Therefore,  I  do  not  question  my 
friend's  statement  about  what  Mr.  McCullochdid,  fori  have  nothing 
to  say  about  it.  The  argument  I  make  is  that  when  we  made  the 
pledge  of  the  public  faith  to  redeem  our  notes  in  coin,  the  only  cur- 
rency that  was  legally  outstanding  was  the  $356,000,000.  All  above 
that  had  been  retired  and  canceled.  If  there  are  any  words  in  our 
language  that  express  the  destruction,  the  annihilation,  the  non-ex- 
istence of  anything,  the  words  "  retired  and  canceled  "  do.  They 
are  the  very  same  words  that  are  used  in  regard  to  the  cancellation  of 
all  our  bonds.  There  have  been  $3,000,000,000  of  bonds  in  various 
forms  "  retired  and  canceled.  Is  there  any  power  to  reissue  those  ? 
Not  at  all. 

Mr.  BOUTWELL.  Mr.  President,  I  am  unwilling  to  interrupt  the 
Senator,  and  I  dislike  to  say  a  word  (m  this  point  of  the  legality  of 
issuing  the  forty-foiu"  millions;  but  as  on  three  difterent  occasions 
during  my  administration  there  was  no  other  way  of  maintaining  the 
l>ublic  credit  b\it  to  issue  a  small  portion  of  the  forty-four  millions, 
as  it  had  been  on  one  occasion  at  least  iTsed  to  a  small  extent  by  my 
immediate  predecessor,  as  it  was  the  oj)inion  of  the  Department  that 
that  legal  power  existed,  as  that  opinion  had  been  continned  by  the 
Attorney-General  of  the  United  States,  as  that  matter  had  been  pre- 
sented to  the  Committee  on  Ways  and  Means  of  the  other  House  and 
the  Committee  on  Finance  of  this  House,  and  as  those  committees 
individually  and  generally  were  informed  by  the  then  Secretary  of  the 
Treasury  what  his  view  was  of  the  legal  rights  of  the  Secretary  of 
the  Treasury  in  this  respect,  and  as  no  action  was  ever  taken,  not  only 
by  Congress,  but  as  no  action  was  taken  by  either  House  of  Congress,  I, 
for  one,  think  it  is  too  late  to  question  the  good  faith  or  even  the  legal 
axithority  of  the  ]>resent  Secretary  of  the  Treasury,  or  of  either  of 
his  two  immediate  predecessors,  upon  that  point. 

Mr.  SHERMAN.  Mr.  President,  the  considerations  now  stated  by 
the  Senator  from  Massachusetts  were  undoubtedly  snbndtted  to  Con- 
gress. The  claim  of  the  Secretary  of  the  Treasury  that  he  had  tlie 
power  to  issue  the  forty-four  millions  was  submitted  to  Congress,  and 
neither  House  of  Congress  negatived  by  a  vote  the  assertion  of  the 
power ;  ami  thei-efore  it  may  be  said  Avith  great  propriety,  and  I  fre«ly 
accord,  that  under  the  circumstances,  following  the  decision  of  the 
Depai'tment,  the  present  Secretary  might  be  justitied  in  issuing  the 
forty-four  millions ;  but  the  argument  I  am  nuiking  to-day  is  not  to 
arraign  the  Secretary,  not  to  find  fault  Avith  him.  In  the  written  report 
made  by  the  Committee  on  Finance  on  this  subject  we  expressly 
relieved  the  Secretary  of  the  Treasury  from  all  fault  in  the  matter 
and  subirutted  it  to  Congress.  I  say  thtit  Congress  now  permits  daily 
the  violation  of  the  oidy  act  that  looked  to  the  advance  of  green- 
backs to  par  with  gold  by  its  silent  ac(iuiescence.  The  Secretary  of  the 
Treasury  submitted  to  us  the  claim  that  he  has  asserted  and  exercised, 
and  we  have  never  denied  it  as  a  Congress  or  by  either  House  of  Con- 
gress ;  and  therefore  I  do  not  find  fault  with  him;  but  I  say  that  Con- 
gress does  permit  this  act,  which  in  my  judgment  is  a  violation  of  law 
and  an  exercise  of  authority  not  delegated  to  the  Secretary  of  the 
Treasury,  to  go  on,  and  we  are  now  dai'y  living  upon  notes  issued 
without  authority  of  law. 

Mr.  President,  1  have  gone  into  this  argument  to  show,  first,  that  we 


24 

are  bDimd  by  the  obligation  that  we  aa^nnicd  on  the  Ifith  of  March, 
1869,  to  resume  specie  payiueuts,  or  to  do  something  to  advance  onr 
notes  to  the  par  of  gold.  I  liave  endeavored  to  show  that  such  was 
the  legal  and  established  policy  of  the  Government  when  the  notes 
were  Srst  issued.  Now,  I  have  only  to  say,  very  briefly,  tliat  there 
are  various  modes,  to  none  of  which  do  I  intend  to  commit  myself 
until  the  whole  sulyect  is  finally  discussed,  by  which  this  can  easily, 
without  trouble,  without  difficulty,  be  accomplished.  There  are  three 
modes  that  have  been  proposed  in  debate  in  the  Senate,  and  a  multi- 
tude come  to  us  from  the  i)eople,  but  I  will  group  them  into  three 
classes. 

There  is,  first,  the  proposition  to  accumulate  gold  in  the  Treasury 
with  a  view  to  the  actual  redemption  of  our  notes  in  coin.  That  is 
8ui>ported  by  two  bills  now  before  tlie  committee ;  one  introduced 
by  the  Senator  from  Vermont,  [Mr.  Morrill,]  and  the  other  by  the 
Senator  from  New  Jersey,  [Mr.  Fkelixghuysex.]  What  are  the  ob- 
jections to  this  plan  ?  They  seem  to  me  to  be  these :  In  the  first 
l>lace,  any  attempt  to  accumulate  large  masses  of  gold  in  the  Treasury, 
lying  idle  to  await  some  future  event  not  fixed  by  act  of  Congress, 
would  not  be  a  wise  use  of  the  public  moneys.  In  the  next  place,  I 
entirely  object  to  conferring  upon  the  Secretary  of  the  Treasury  the 
power  of  issuing  one  hundred  millions  or  any  lesser  sum  of  6  per  cent, 
bonds  with  a  view  to  buy  gold  to  hoard  it  in  the  Treasury  to  maintain 
resumption.  I  believe  that  it  is  impossible,  in  the  very  nature  of 
things,  to  maintain  the  resumption  of  specie  payments  at  all  times 
and  under  all  circumstances ;  and  if  anything  has  been  established 
by  modern  experience,  it  is  that  all  a  nation  can  do  that  issues  i)aper 
money  is  to  maintain  it  at  a  specie  standard  in  ordinary  times ;  but, 
in  times  of  panic,  such  as  by  periodical  revulsions  come  over  every 
country,  specie  payments  cannot  be  maintained.  They  can  scarcely 
be  maintained  in  England,  and  are  not  now  maintained  in  France,  al- 
though they  approacli  them.  Therefore,  every  plan  for  specie  payments 
ought  to  have  some  provision  for  the  temporary  suspension  of  specie 
payments,  or  some  means  by  which  in  times  of  great  panic  and  finan- 
cial distress  there  may  be  a  temporary  departure  from  the  specie 
standard.  I  say  this  not  that  it  ought  to  be  so,  but  simi)ly  an  a  matter 
of  demonstrated  experience  shown  by  the  history  of  almost  all  com- 
mercial nations  in  Europe. 

The  second  plan  is  the  actual  payment  of  the  United  States  notes 
and  their  cancellation ;  in  other  words,  the  ])lan  of  contraction.  In 
the  first  place,  this  plan,  while  it  operates,  does  so  with  such  severity 
as,  in  a  popular  government  like  oiu's,  to  cause  its  suspension  and  re- 
peal. Undoubtedly,  the  most  certain  way  to  produce  specie  ])aymeuts 
is  by  retiring  the  notes  that  are  dishonored,  paying  them  ott',  taking 
them  out  of  circulation.  But  the  trouble  is,  the  process  of  contrac- 
tion is  itself  so  severe  upon  the  ordinary  current  busiu^eas  of  the 
country  that  the  people  will  not  stand  it;  and  in  this  country  the 
people  rule.  The  policy  of  Mr.  McCtilloch,  already  commented  upon, 
if  it  had  been  continued  further,  would  have  undoubtedly  brought  us 
to  a  specie  standard ;  but  with  great  distress,  great  impoverishment, 
and  with  more  difficulty  than  was  really  necessary  to  accomplish  the 
object  in  view. 

These  are  the  difficulties  that  occur  to  me  as  against  these  two 
policies. 

There  is  a  third  plan.  This  plan,  which  in  my  judgment  presents 
the  eiisiest  and  best  mode  of  attaining  specie  payments,  is  by  taking 
some  bond  of  the  United  States  which  in  ordinary  times,  by  current 


25 

events,  is  shown  to  be  worth  par  in  gold  in  the  money  niarkcjts  of  the 
work],  where  specie  is  alone  the  standard  of  value,  and  authorize  the 
conversion  of  notes  into  that  bond. 

I  do  not  intend  to  consume  much  time  upon  the  discussion  of  these 
different  plans,  because  they  are  all  open  for  debate,  and  I  do  not 
intend  to  commit  myself.  I  have  no  pride  of  opinion  as  to  modes  if 
I  can  secure  the  substance.  I  want  to  get  at  some  measure  which, 
without  contraction,  without  undue  distress,  will  make  us  redeem 
our  jiromise.  This  mode  of  vesting  the  specie  standard  was  reported 
favorably  by  the  Committee  on  Finance  at  the  last  session.  I  will 
glance  at  the  results  that  would  have  been  accomplished  by  that  plan 
in  the  present  condition  of  our  money  market.  I  am  speaking  here 
now,  on  the  16th  day  of  January,  1874,  after  the  time  when,  by  the  bill 
reported  at  the  last  session,  United  States  notes  could  have  been  con- 
verted into  coin  or  bonds  at  the  option  of  the  United  States.  This 
would  not  to-day  have  produced  absolute  payment  pf  the  notes 
in  coin,  but  their  value  would  be  advanced  to  the  value  of  the  5  per 
cent.  bond.  Things  that  are  equal  to  the  same  are  equal  to  each  other. 
Five  per  cent,  gold  bonds  this  day,  in  the  midst  of  the  panic,  are  worth 
ninety-nine  and  a  half  cents  ;  so  that  the  United  States  notes  would 
be  this  day  practically  at  par  in  gold,  having  just  about  the  s,ame 
depreciation  as  now  exists  in  France  where  the  law  of  convertibility 
has  always  been  maintained.  In  France,  with  a  large  currency,  that 
currency  may  be  used  to  paj-  the  same  as  gold  for  any  form  of  debt 
of  or  to  the  government,  even  the  form  of  duties. 

Mr.  FERRY,  of  Michigan.     I  should  like  to  ask  a  question  just  here. 

Mr.  SHERMAN.     I  would  rather  not  be  interrupted  now. 

Mr.  FERRY,  of  Michigan.  It  is  on  the  point  the  Sejiator  wa.s  just 
discussing. 

Mr.  SHERMAN.    Very  well. 

Mr.  FERRY,  of  Michigan.  I  avskwhether,  in  the  Senator's  judgment, 
the  value  of  the  currency  in  France  depends  so  much  on  the  convert- 
ibility of  the  notes  into  bonds,  or  on  their  being  made  lawful  money  for 
all  purposes,  which  our  gi-eenbacks  are  not  ? 

Mr.  SHERMAN.  I  have  no  doubt  that  it  would  greatly  advance 
our  greenbacks  if  they  were  allowed  to  be  received  at  the  custom- 
houses for  duties. 

Mr.  FERRY,  of  Michigan.     Is  that  not  the  case  in  France  ? 

Mr.  SHERMAN.  I'es  ;  but  I  will  ask  the  Senator  a  question  now. 
Would  he  pass  such  a  law  in  the  face  of  the  obligation  of  the  United 
States,  made  on  the  2oth  day  of  Februarj',  1862,  that  this  coin  shall 
be  set  apart  sacredly  as  a  fund  ? 

Mr.  FERRY,  of  Michigan.  If  I  had  control  of  the  finances  of  this 
nation  I  would  not  discredit  my  own  paper ;  I  would  declare  it  good 
for  all  pur])oses  for  or  against  me,  and  then  enter  the  market  and 
purchase  the  gold  necessary  to  meet  the  obligations  which  I  had 
agreed  to  pay  in  coin.  In  that  case  I  would  stand  upon  the  French 
basis  and  maintain  the  same  credit  which  the  French  nation  main- 
tains to-day,  to  wit,  a  discouut  of  ^  per  cent,  on  its  currency,  while 
ours  to-day  is  about  10  ])er  cent.,  for  the  very  reason  that  we  have  not 
made  our  currency  lawful  money  for  all  purposes,  but  have  made  an 
exception  in  regard  to  duties. 

Mr.  SHERMAN.     I  only  gave  way  to  a  question. 

Mr.  FERRY,  of  Michigan.  The  Senator  put  a  question  to  me,  aud 
I  was  answering  it. 

The  PRESIDENT  |)?-o  tempore.  The  Senator  from  Ohio  declines  to 
be  further  inteiTupted. 


26 

Mr.  SHERMAN.  The  answer  to  all  tliis  is,  tliat  by  the  act  of  the 
25th  of  February,  1862,  which  authorized  the  issue  of  bonds  and 
greenbacks  both,  it  was  expressly  stipulated  that  the  greenbacks 
should  not  be  receivable  for  customs  duties,  but  it  was  expressly 
stipulated  that  the  customs  duties  should  be  paid  in  coin,  and  that 
this  coin  should  be  si)ecially  pledged  and  set  ai)art  as  a  fund  to  pay 
the  interest,  and  then  the  principal,  of  the  debt.  There  is  the  diffi- 
culty. If  we  were  now  to  legislate  without  any  law  upon  the  statute- 
book,  I  certainly  would  not  pass  an  act  that  would  require  us  to  refuse 
the  nates  of  the  United  States  for  the  taxes  payable  to  the  United 
States;  but  we  are  crippled  by  the  operation  of  a  law  that  we  can- 
not repeal  without  violating  the  public  faith. 

Now,  sir,  taking  the  case  again  of  the  existence  of  some  such  con- 
vertible provision  as  I  referred  to  in  the  bill  of  last  year,  at  this  day 
the  notes,  instead  of  being  hoarded,  Avouldto  some  extent  have  floated 
into  the  Treasury  for  5  per  cent,  bonds ;  they  would  be  paid  out  for 
current  expenses,  and  in  the  purchase  or  redemption  of  five-twenties 
at  a  discount  of  one-half  of  1  per  cent.  It  is  sometimes  said  that 
these  not«s  would  flow  in  in  unmeasured  numbers  for  5  i)er  cent, 
bonds.  Why,  sir,  how  manj'  would  be  withdrawn  from  the  volume 
of  the  currency  before  they  would  be  ecjual  to  the  5  per  cent,  bonds 
now  at  or  near  par  in  gold  ?  But  suppose  they  should  flow  in  to  the 
extent  of  fifty  or  one  hundred  millions,  cannot  the  Government  of 
the  United  States  use  them  ?  First,  we  have  to  pay  our  current  ex- 
penses, which  are  now  more  than  our  income.  Instead  of  consuming 
the  forty-four  million  reserve,  we  could  use  some  of  them  coming  into 
the  Treasury  for  bonds  to  pay  the  current  expenses;  and  we  could 
use  all  of  them  in  the  purchase  and  redemption  of  the  6  per  cent, 
bonds  of  the  Unitrtl  States.  There  would  be  no  practical  difficulty 
in  using  all  the  currency  that  might  flow  into  the  Treasury  in  the 
payment  and  liquidation  at  a  slight  sacrifice  of  a  del»t  now-  bearing 
6  per  cent,  interest.  That  operation  might  go  on  luitil  $1,200,000,000 
were  paid,  because  every  dollar  of  the  five-twenty  bonds  is  now  due 
and  payable  at  our  pleasure  in  coin. 

Sir,  the  Secretary  of  the  Treasury  has  for  years  adopted  the  policy 
of  buying  bonds  in  greenbacks.  He  has  paid  10  per  cent,  premium, 
because  he  could  not  get  them  for  less.  AjuI  suppose  our  notes  were 
advanced  near  the  par  of  gold  by  being  convertible  into  a  5  per  cent. 
bond,  the  value  of  which  is  fixed  in  foreign  countries,  then  let  him 
use  the  greenbacks  that  flow  into  the  Treasury-  to  pay  the  6  per  cent. 
bonds.  He  could  only  do  it  by  paying  the  diffierence  between  notes  and 

fold.  What  premium  would  he  have  to  pay  ?  One-half  of  1  per  cent, 
'his  operation  of  funding  the  6  per  cent,  bonds  into  the  new  5  per 
cents  is  going  on  now  at  an  expense  of  nearly  2  per  cent,  to  the  Gov- 
ernment. First  the  law  allows  1  per  cent,  for  expenses,  and  then  a 
certain  credit  or  a  certain  delay  in  payment  is  given  to  the  syndi- 
cate or  bankers  who  negotiate  the  exchange.  This  is  equivalent  to  1^ 
per  cent.,  so  that  we  are  now  carryuig  on  this  ftmding  system  at  an  ex- 
pense of  more  than  2  per  cent.  Sir,  the  practical  operation  of  a  la^r 
permitting  the  conversion  of  notes  into  bonds  would  not  only  advance 
our  notes  to  near  par  in  gold,  but  would  enable  us  to  reduce  the  inter- 
est on  the  whole  mass  of  6  per  cent,  bonds  of  the  United  States  to 
5  per  cent.,  thus  saving  i$l^,000,000  per  annum,  or  several  times  the 
amount  of  interest  we  would  pay  on  bonds  given  for  notes  permanently 
retired. 

Now,  sir,  I  will  not  go  into  the  details  of  the  other  provisions  of 
that  bill,  which  Avas  to  supply  any  want  of  currency  needed  at  the 


27 

time.  That  bill  provided  for  free  banking  ;  it  provided  for  a  relief 
from  the  reserve  to  be  maintained  by  the  banks  as  a  security  for  their 
notes.  Sir,  if  you  take  the  actual  facts  as  they  have  now  develoi>ed 
themselves  and  apply  the  principles  contained  in  the  bill  of  the  last 
session,  they  would  have  auswei-ed  by  their  actual  workings  all  the 
objections  that  were  made  to  the  bill,  and  I  defy  Senators  to  criti- 
cise it. 

But,  sir,  the  time  will  come  when  whatever  plan  may  be  brought 
before  the  Senate  will  be  subjected  to  amendment  and  criticism.  We 
are  not  now  considering  any  plan,  but  only  whether  we  recognize  oiu* 
obligation  now  at  this  session  to  do  some  definite  act  to  redeem  our 
broken  promises.     If  you  will  you  can  find  a  way. 

Mr.  President,  there  are  some  objections  of  a  popular  character 
made  to  specie  payments,  that  I  think  I  ought  to  answer. 

In  a  popular  government  like  ours  even  an  unfounded  fear  ought 
not  to  go  unheeded.  Warnings  are  uttered  ;  agreat  bugaboo  is  raised 
against  every  measure  that  tends  toward  specie  payments.  Let  us 
examine  some  of  these  popular  objections. 

The  first  objection  (and  it  is  the  only  one  well  taken)  is  that  specie 
resumption  will  be  burdensome  to  debtors.  Undoubtedly,  if  you 
advance  a  standard  in  which  a  man's  debt  is  to  be  paid,  you  add  to 
the  burden  of  that  debt.  We  are  now  dealing  on  a  standard  of  about 
11  per  cent,  below  par;  and  if,  by  some  sudden  act  of  Congress,  a 
debtor  should  be  required  to  pay  in  a  standard  worth  11  per  cent. 
more  than  the  present  par,  it  would  be  burdensome  to  him.  There- 
fore it  is,  and  for  this  reason  only  it  is,  necessary  to  make  any  step 
moderate,  to  make  the  advance  slow ;  and  I  for  one  would  not  de- 
sire to  see  any  sudden  resumption,  because  it  would  be  injiuious  to 
a  class  of  business  men  ay  ho  are  now  more  or  less  in  debt.  This  injury 
is  gi'eatly  exaggerated,  for  almost  every  debtor  is  a  creditor,  and 
therefore  while  he  loses  on  the  one  hand  he  gains  on  the  other.  Debts 
are  now  less  than  they  were  a  short  time  since.  The  recent  panic 
swept  away  a  great  many  of  them.  Most  of  those  which  remain  are 
being  settled  on  the  present  basis,  so  that  never  was  there  a  time 
when  an  act,  looking  to  a  change  of  the  standard  of  values,  could  be 
made  better  than  now.  There  are  fewer  contracts  to  be  settled  upon 
the  old  standard.  If  the  time  for  making  this  change  of  standard  is 
postponed  for  a  short  period,  say  a  year,  all  the  debts  contracted  on 
the  present  basis  would  be  settled  up. 

Why,  sir,  this  is  not  the  first  time  we  h.ave  changed  the  standard. 
We  did  it  in  1835;  and  we  have  changed  the  value  of  our  gold  coin 
twice  within  my  recollection.  We  have  changed  the  value  of  silver 
two  or  three  times.  The  monthly  fluctuations  that  happen  in  the  city 
of  New  York  sometimes  are  greater  than  all  the  amount  of  difference 
between  our  paper  money  and  gold  now.  The  people  are  used  to 
these.  Sir,  you  live  in  a  State  whose  chief  production  is  now,  or  was, 
wheat.  You  have  seen  wheat  jump  up  from  fifty  cents  to  a  dollar  a 
bushel,  and  go  down  from  a  dollar  to  fifty  cents  again — a  fluctuation 
of  100  per  cent.  These  fluctuations  are  unavoidable  ;  but  when  they 
affect  the  standard  of  all  values  they  ought  to  be  made  carefully  and 
slowly.  Here,  Senators,  is  the  only  difficulty  in  this  whole  problem. 
When  we  made  our  notes  a  legal  tender,  when  we  repealed  the  con- 
vertibility clause,  when  we  took  away  their  value  and  saw  them  de- 
preciate down  to  2d0  per  cent.,  we  did  great  injustice  to  creditors. 
We  did  it  because  we  were  compelled  to  do  it.  All  the  Senators, 
around  me  admit  that  at  some  time  Ave  must  come  to  a  specie  standard. 
When  can  Ave  do  it  more  easily,  when  can  Ave  do  it  better?    Will  you 


28 

flood  the  couutiy  again  with  more  irredeemable  paper  money,  sink 
again  the  standard  of  vahie,  make  the  depreciation  beyond  what  it 
was  when  General  Grant  was  elected,  30  or  40  per  cent.,  and  then 
resume?  How  foolish!  how  idle!  T\\e  moment  when  we  approach 
the  specie  standard  nearest  by  natural  causes,  that  is  the  happy  mo- 
ment to  complete  the  cycle,  to  restore  us  to  the  old  and  true  founda- 
tion. 

The  next  objection  is  that  the  United  States  will  have  to  pay  inter- 
est on  a  portion  of  its  debt  which  is  now  without  interest.  I  have 
heard  that  argument  made,  I  think  by  my  friend  fi'om  Indiana.  He 
has  said,  "You  would  make  us  pay  interest  on  our  greenbacks;  they 
will  be  converted  into  interest-bearing  bonds."  Well,  why  should  we 
not  pay  interest  on  our  debt  that  is  due  f  Why  should  the  people  of 
the  United  States  have  a  forced  loan  which  they  require  everybody 
to  take,  debtor  and  creditor,  without  interest  ?  Why  should  they  not 
pay  interest  on  it  ?  If  these  notes  are  idle  in  the  nands  of  the  peoi)le 
and  there  is  no  opportunity  for  investment,  and  they  have  no  desire  to 
use  them,  why  should  we  not  pay  interest  while  thej^  do  not  want  to 
use  themf  It  is  perfectly  obvious  that  the  strongest  groundsof  equity 
demand  that  when  anybody  has  our  note  not  bearing  interest,  has  no 
immediate  use  for  it,  prefers  to  put  it  on  interest,  we  are  bound  either  to 
pay  him,  as  we  agreed  to  pay  him,  in  coin,  or  we  are  bound  to  give  him 
something  that  will  bear  interest,  and  will  be  as  near  as  practicable 
to  a  specie  standard.  Therefore,  this  scarecrow  about  increasing  our 
interest-paying  debt  does  not  disturb  me.  Why,  sir,  we  have  in  the 
last  five  years  paid  oft' four  hundred  millions  of  bonds,  and  have  saved 
interest  to  the  amount  of  $30,000,000.  No  one  has  claimed  that  the 
interest  of  the  debt  of  the  United  States  would  be  increased  by  this 
system  more  than  two  or  three  millions.  Why  should  we  not  do  it? 
Why  should  not  the  people  have  for  theii"  greenbacks  the  same  privi- 
lege that  is  extended  to  other  creditoi-s? 

A  third  objection  that  was  made,  I  think  by  my  colleague,  who  is 
not  now  in  his  seat,  [Mr.  Thurmax,]  was  that  the  United  States 
notes  would  be  retired  from  circulation  and  give  place  to  bank-notes, 
and  he  has  a  great  prejudice  against  bank-notes.  I  am  not  much  of 
a  bank  man  myself.  I  would  not  care  if  there  was  only  one  form  of  cir- 
culation in  this  country,  and  that  a  United  States  note  convertible  at 
the  pleasure  of  the  holder  into  a  proper  bond,  or  into  coin.  But  the 
national  banks  sprang  out  of  the  necessities  of  the  war.  We  could 
not  absorb  the  State  banks  and  get  rid  of  the  horde  of  inconvertible, 
irredeemable  paper-issuing,  in-esponsible  system  of  banks  all  over  this 
country,  except  by  allowing  them  to  be  organized  into  national  banks. 
We  cannot  get  rid  of  them  now.  That  was  the  only  way  in  which 
they  could  be  dealt  with.  They  disturbed  during  the  war  our  whole 
system;  but  now  the  present  banking  system  is  so  much  better  than 
the  old,  the  currency  is  so  good,  so  well  secured,  of  such  universal 
circulation,  and  everywhere  at  par  with  greenbacks,  that  nobody 
would  propose  to  go  back  to  the  old  system. 

Mr.  President,  as  these  banks  are  compelled  to  rdWeem  their  notes 
in  greenbacks;  as  they  are  bound  to  maintain  in  their  vaults  a  reserve 
of  greenbacks ;  as  every  prudent  banker  will  maintain  this  reserve 
in  greenbacks ;  there  is  no  danger  that  the  United  States  notes  will 
be  driven  from  circulation  to  give  place  to  bank-notes  to  any  consid- 
erable amount.  The  same  provision  for  redemption  that  is  ai)plied  to 
United  States  notes  is  applicable  also  to  national-bank  notes.  If  the 
United  States  redeem  their  notes  in  coin,  the  banks  have  to  redeem 
theirs  in  coin.     If  the  United  States  notes  are  redeemed  in  United 


29 

States  bonds,  the  banks  are  compelled  to  redeem  their  notes  in  the 
same  way.  The  veiy  moment  that  a  bank-note  falls  below  the  value, 
the  purchasable  power,  the  convertible  power  of  the  United  States 
note,  that  very  moment  it  would  be  returned  first  to  the  bank,  and  in 
case  of  its  failure  .to  pay  then  to  the  Treasury  of  the  United  States, 
and  there,  with  the  bonds  in  the  Treasury  or  with  the  proceeds  of 
them,  the  Treasm-er  would  pay  them  dollar  for  dollar.  So  that  the 
same  plan  of  redemption  that  we  now  propose  to  apply  to  UnitedStates 
notes  is  apjilicable  by  existing  law  to  the  bank-notes ;  and  hence  the 
theory  that  this  plan  will  drive  out  the  United  States  notes  and  give 
way  to  bank-notes  is  utterly  futile.  The  same  burden  which  now 
rests  on  the  United  States  to  redeem  its  notes  will  then  rest  on  the 
banks ;  and,  as  I  said  a  moment  ago,  you  are  now  dealing  with  insti- 
tutions that  are  amply  able  to  redeem  their  notes.  Whether  any  of 
them  have  in  the  speculations  of  the  past  impaired  their  capital  or 
not,  is  a  matter  of  perfect  indifference  to  the  people  of  the  United 
States  as  long  as  the  notes  are  secure.  You  can  present  no  plan  of 
redemption  which  the  banks  are  not  able  at  this  moment,  promptly 
to-day,  to  comply  with.  If  your  law  should  take  effect  requiring  the 
banks  to  redeem  either  in  coin  or  in  bonds  of  the  United  States,  every 
bank  has  these  bonds  and  10  per  cent.  over.  Therefore  this  plan  of 
redemption  applies  not  only  to  the  United  States  notes,  but  to  the 
banks  under  existing  law ;  and  it  is  not  necessary  to  even  change  the 
law  to  make  it  more  rigorous  or  direct. 

Sir,  the  last  objection  is  that  it  will  contract  the  currency.  That  is 
the  image  of  alarm  that  came  tons  from  theexperiment — as  I  thought 
the  bad  experiment — of  1866.  My  honorable  friend  from  Indiana,  from, 
the  way  in  which  lie  pronounced  the  word  "contraction,"  seemed  to 
think  it  was  some  terrible  thing.  Well,  sir,  the  people  are  afraid  of 
contraction.  I  do  not  want  to  contract  the  cuiTency.  But  what  is 
contraction  ?  Is  it  to  fulfill  an  obligation  to  pay  a  note  when  it  is 
due ;  to  pay  in  coin  when  you  have  promised  to  pay  in  coin  ?  I  do  not 
think  that  is  contraction.  Why,  sir,  I  do  honestly  believe  that  if  now 
there  was  a  plan  of  redemption  agreed  upon  by  which  notes  could  be 
converted  into  coin  or  bonds  at  the  pleasm-e  of  the  holder,  all  restric- 
tions upon  the  amount  of  currency  were  repealed,  the  amount  of  cur- 
rency thiis  at  par  with  gold  would  be  greater  thanit  is  at  present,  and 
its  purchasing  power  would  be  just  exactly  11  per  cent.  more.  The  peo- 
ple, in  the  Western  States  especially,  have  been  very  fearful  on  this 
point,  although  they  are  now  getting  bravely  over  it.  Look  at  the  re- 
ports of  there  chambers  of  commerce,  their  boards  of  trade ;  see  the  in- 
telligent opinion  that  comes  up  from  the  Western  States.  The  peopl6 
of  the  West  were  terribly  alarmed  about  contraction  of  the  currency, 
but  they  begin  to  understand  it.  The  laboring  man  who  is  paid  off 
in  a  greenback  begins  to  desire  that  that  greenback  may  buy  as  much 
food  and  clothing  and  produce  as  the  best  dollar  that  was  coined  in 
the  mint.  He  begins  to  understand  that  he  receives  that  for  his  daily 
labor  which  will  not  purchase  him  the  supplies  that  gold  would.  The 
farmer,  also,  who  sells  his  produce  mostly  to  a  foreign  market,  finds 
that,  under  this  system,  when  he  is  paid  in  gi'eenbacks,  he  has  to  pay 
gieenback  prices  for  his  purchases,  while  his  commodities  are  settled 
for  by  the  gold  standard.  , 

And,  sir,  I  can  here  show  by  the  actual  returns  from  Mr.  Young,  of 
the  Statistical  Bureau  of  the  Treasury  Department,  that  although  the 
price  of  greenbacks  fluctuates,  as  compared  with  the  standard  of  gold, 
yet  the  articles  which  the  farmer  sells  depend  almost  entirely  on  the 
gold  price'  and  are  fixed  by  the  gold  standard.    Wherever  he  sells  his 


30   . 

surplus  products,  the  ruling  price  iu  the  foreign  market  fixes  the 
prices  of  his  commodities  here.  The  price  of  the  farmer's  produce  is 
fixed  by  the  gold  standard,  and  was  during  all  the  war,  and  is  to-day, 
and  will  be  to-morrow.  His  price  is  fixed  l)y  the  gold  standard,  while 
what  he  buys  is  fixed  by  the  currency  standard. 

The  people  are  beginning  to  tinderstand  that ;  and  when  they  find 
out  that  "contraction,"  with  all  its  horrors,  means  good  money,  con- 
vertible money,  greenbacks  convertible  into  gold,  they  will  sound 
hallelujahs  in  favor  of  that  kind  of  money.  They  now  feel  that  the 
greenback  money  is  a  good  money — as  my  friend  from  Indiana  says, 
the  best  money  that  ever  was  devised  by  man.  Well,  sir,  in  many  of 
its  properties  it  is  good  money ;  it  is  of  universal  circulation,  univer- 
sal credit;  it  has  a  fixed  value,  fixed  daily  by  the  quotations  in  New 
York,  and  it  has  a  universal  value ;  it  passes  readily  from  hand  to 
hand.  It  is  so  much  better  than  the  old  system,  and  all  like  it.  There  is 
only  one  thing  to  crown  the  perfect  work  of  this  money  to  make  it 
the  best  in  the  world,  and  that  is,  make  it  equal  to  what  it  promises 
to  pay.  Then  you  have  good  money,  you  have  money  based  upon  the 
public  credit,  a  note  of  the  United  States  not  dishonored,  a  note  whose 
purchasing  power  is  as  good  as  the  best  gold  that  ever  was  coined  in 
any  mint,  or  ever  mined  in  Peru,  or  Australia,  or  America ;  a  money 
whose  purchasing  power  will  enter  into  the  markets  of  the  world 
and  buy  its  face  value  in  the  products  of  the  world;  a  money  which, 
if  convertible  into  coin,  will  travel,  like  the  Bank  of  Enghmd  note, 
all  around  the  world,  buying  in  every  mart  and  every  community  the 
production  of  every  clime.  Sir,  this  is  what  we  aim  at,  this  is  what 
we  desire;  and  when  the  people  begin  to  understand  this  question, 
and  see  that  this  cry  about  contracting  the  currency  means  nothing 
but  an  eifort  to  stave  off  the  immutable  event  which  will  come,  which 
we  have  promised  shall  come,  namely,  a  specie  standard,  they  will 
then  silence  the  demagogical  clamor  of  the  hour. 

Why,  sir,  a  year  or  two  ago,  if  yoti  had  convened  your  chambers  of 
commerce  and  boards  of  trade  and  representative  business  men  of  the 
country  before  this  panic,  and  submitted  to  them  anyproposition  which 
looked  to  the  advancement  of  the  greenback  to  tlie  standard  of  gold, 
they  would  have  passed  resolutions  without  number  against  it.  But 
now  they  are  all  passing  resolutions  for  it.  Almost  every  one  of  them 
is  opposing  any  increase  of  the  paper  money  of  the  country.  These 
documents  from  representative  men  could  not  have  come  here  a  year 
ago  in  favor  of  specie  payments,  led  off  by  the  great  petition  from  the 
Chamber  of  Commerce  of  New  York,  presented  here  a  month  ago.  Sir, 
the  people  will  soon  reply  to  these  popular  objections. 

But,  sir,  we  have  had  a  great  deal  of  talk  here  about  the  amount  of 
<;urrency  we  ought  to  have,  and  Senators  have  made  the  computation 
how  much  currency  per  inhabitant,  how  much  for  every  man,  woman, 
and  colored  baby,  how  much  for  every  child,  how  much  for  every 
bushel  of  wheat.  How  much  currency  should  we  have  ?  They  figure  i  t 
out  in  someway  that  France  and  England  have  more  currency  than  we, 
and  that  as  no  nation,  shall  have  more  of  a  good  thing  than  the  United 
states,  therefore  we  are  determined  to  have  all  that  any  other  country 
has!  That  is  the  argument.  They  say,  "We  want  more  money." 
Well,  in  the  sense  in  which  money  means  capital,  I  think  we  all  want 
more  money.  In  the  sense  in  which  money  is  used  as  a  mere  medium 
of  exchange  to  measure  value,  to  pass  from  hand  to  hand,  to  facilitate 
commercial  transactions,  the  only  test  and  measure  of  the  amount 
necessary  is  that  which  can  be  maintained  at  the  specie  standard;  no 
other.    Why,  sir,  you  might  as  well  say  that  a  yard  is  n'ot  thirty-six 


31 

inches  long,  and  economize  by  using  one  thirty  inches  long ;  what 
would  be  the  effect  of  it  ?  It  would  take  more  yards  of  cloth  to  make 
the  coat ;  but  the  coat  would  not  cost  any  less. 

Sir,  the  only  standard  of  the  amount  of  paper  money  needed  in  any 
country  is  the  amount  that  can  be  maintained  at  the  specie  standard. 
The  amount  of  currency  in  Great  Britain,  in  Bank  of  England  notes, 
is  £25,162,000;  in  other  banks  of  England,  Ireland,  and  Scotland, 
£18,228,000;  making  a  total  of  £43,338,000,  or,  in  dollars,  216,940,000 
of  paper  money,  as  good  as  gold.  That  is  enough  to  carry  on  all  the 
business  transactions  of  Great  Britain. 

But  my  friend  from  Indiana  says  Great  Britain  is  a  small  country 
compared  to  the  United  States ;  it  does  not  cover  as  many  arid  plains 
and  deserts  as  the  United  States  ;  it  has  not  the  area  or  the  population 
of  the  United  States.  Sir,  area  and  pojiulation  are  not  the  things  that 
demand  currency ;  it  is  business,  wealth,  production ;  and,  although 
I  wish  it  was  otherwise,  we  cannot,  as  jet,  compare  with  the  wealth 
or  commerce  of  Great  Britain. 

Mr.  MORTON.  Does  the  Senator  give  that  as  the  entire  currency 
of  Great  Britain  ? 

Mr.  SHEKMAN.  I  give  that  as  the  entire  paper  currency  of  Great 
Britain.  ^ 

Mr.  FERRY,  of  Michigan.  I  slionld  like  to  ask  the  Senator  if  business 
can  be  done  without  people  or  area  ? 

Mr.  SHERMAN.  No,  sir ;  we  must  have  some  people  to  carry  on 
business,  and  some  area  on  which  they  may  live.  We  have  been  told 
that  Great  Britain  is  a  small  country  compared  with  ours,  and  yet 
that  kingdom  contains  thiity  million  people,  who  have  now  twice 
the  actual  Avealth,  and  more  than  twice  the  commerce,  of  our  people. 
The  accumulated  wealth  of  ages  of  our  own  race  is  there. 

Mr.  FERRY,  of  Michigan.  I  understood  the  Senator  to  say  that  it 
was  capital  that  was  wanted,  and  not  jteople  or  area.  Can  there  be 
capital  without  peoj)le  or  area  f 

Mr.  SHERMAN.     I  do  not  understand  the  Senator. 

Mr.  FERRY,  of  Michigan.  I  understood  the  Senator  to  say  that  the 
volume  of  the  currency  depended  upon  the  business  of  the  country, 
and  not  upon  the  people  or  territory. 

Mr.  SHERMAN.  I  did  not  say  that.  I  said  the  currency  necessarily 
depended  upon  wealth,  production,  &c. 

Mr.  FERRY,  of  Michigan.  And  not  upou  people,  or  the  extent  of 
territory  ? 

Mr.  SHERMAN.  Without  people  and  area  there  can  be  no  wealth 
and  production;  but  the  amount  of  currency  needed  deiiends  upon  the 
amount  and  natm-e  of  the  productions  of  the  people.  The  Senator 
from  Iiuliana  says  that  $216,940,000  is  only  one  form  of  money  in 
Great  Britain .  So  it  is ;  l)ut  it  is  the  amount  of  paper  money  that 
they  undertake  to  maintain  at  par  in  gold.  A  wise  nation  like  Great 
Britain,  with  ample  experience  in  all  financial  questions,  where  they 
have  been  managed  with  great  skill,  where  more  time  in  Parliament 
is  devoted  to  them  than  in  Congress  here — that  nation  has  decided  that 
it  ia  not  wise  ever  to  attempt  to  circulate  more  paper  money  than  can 
at  all  times  be  maintained  at  par  in  gold.  They  prohil)it  by  law  the 
issue  of  any  more  paper  money.  No  new  stock  banks  are  organized, 
and  the  Bank  of  England  cannot  issue  one  pound  of  paper  money 
more  than  the  amount  iixed  by  law  thirty  years  ago,  at  £15,000,000, 
and  such  additional  amouu  t  as  they  have  actual  gold  on  hand.  Every 
dollar  is  secured  by  government  securities  or  gold  on  hand. 

Senators  say  that  the  Bank  of  England  can  issue  in  times  of  panic 


32 

more  than  the  amount  allowed.  It  has  done  so  at  three  exceptional 
periods  of  distress.  But  this  did  not  cause  a  suspension  of  specie  pay- 
ments. Not  at  all.  When  the  Bank  of  England  note  is  issued  in 
excess  of  the  legal  limit  it  is  done  by  order  of  the  ministry,  at  their 
hazard,  just  as  they  -would  do  any  other  unlawful  act  for  the  public 
safety.  The  amount  is  limited,  say  to  £2,000,000,  or  f!lO,000,000; 
securities  are  required,  and  the  profit  of  that  issue  goes  to  the  govern- 
ment. So  careful  are  they.  The  amount  of  notes  issued  by  the  Bank 
of  England  in  excess  of  the  legal  limit  was  never  over  £2,000,000 
sterling,  and  in  one  case  no  notes  were  issued.  The  authority  to  issue 
arrested  the  panic.  The  issue  when  made  was  within  sixty  days  with- 
drawn and  the  old  limit  restored.  Why,  sir,  we  in  this  country  have  in- 
creased our  paper  money  in  five  years  over  $80,000,000,  and  the  Secre- 
tary of  the  Treasury  during  and  since  the  panic  has  issued  new  paper 
money  fotrrfold  in  volume  the  aggregate  of  temi)orary  issues  by  the 
Bank  of  England  since  Peel's  act  of  1844. 

But  the  Senator  from  Indiana  says  Great  Britain  has  coin.  So  it 
has,  and  the  reason  why  it  has  coin  is  because  there  is  a  use  for  the 
coin  there.  So,  if  we  were  at  the  specie  standard,  coin  made  in  our 
own  country  of  the  gold  mined  here  would  be  kept  here.  It  would 
have  some  useful  emidoj-ment.  But,  sir,  one  of  the  evil  effects  of  a 
depreciated  currency  is  to  demoaetize  coin,  to  drive  it  out,  because 
the  poorer  currency  always  fills  the  channels  of  circulation.  There- 
fore it  is  that  we  cannot  keep  in  this  country  any  considerable 
amount  of  gold  in  the  present  condition  of  our  affairs,  unless  we  hoard 
it  in  the  Treasury  of  the  United  States.  A  private  citizen  has  no  use 
for  it.  He  sends  it  abroad  where  they  do  recognize  its  value,  where 
they  do  use  it  in  ordinary  affairs.  The  gold  of  our  country  is  hoarded 
by  the  Treasury ;  and  as  long  as  you  have  a  depreciated  currency  one 
of  the  inevitable  effects  of  such  a  currency  is  to  banish  gold  from  the 
country,  although  it  is  our  own  production.  We  banish  the  chiklren 
of  our  mines,  the  work  of  our  hands,  because  we  will  deny  the  funda- 
mental truth  that  gold  mined  from  the  earth  is  the  standard  of  value. 
We  have  repudiated  it.  We  have  rejected  the  true  god  and  set  up 
an  idol  of  our  own ;  and  thus  that  which  we  iiroduce  ourselves  is 
forced  from  our  own  country. 

So  with  France.  I  have  already  given  the  amount  of  paper  circu- 
lation there.  The  issues  of  the  Bank  of  France  were  2,606,377,000 
francs,  or  $521,275,000;  and  this  is  practically  maintained  at  par  in 
gold,  as  the  Senator  from  Michigan  [Mr.  Ferry]  very  properly  said. 

Now,  sir,  when  this  cry  is  made  for  more  money,  I  answer,  yes  ;  let 
us  have  more  money,  but  let  it  be  more  good  money,  more  money  that 
will  purchase  that  which  money  in  any  other  coiuitry  will  purchase. 
I  want  the  best ;  and  if  my  friends  here  really  believe  that  France 
and  Great  Britain  have,  counting  their  gold,  a  little  more  currency 
per  capita  than  we  have,  let  me  console  them  by  telling  them  that  if 
we  come  back  to  specie  payments  we  shall  have  more  good  money, 
both  paper  and  coin,  than  any  country  in  the  world.  Now,  at  this 
moment,  if  you  take  our  paper  money  and  add  it  to  the  gold  in  this 
country,  you  will  see  that  we  have  more  per  capita  than  any  nation  in 
the  world.  Why,  sir,  how  much  paper  money  have  we?  About 
$772,000,000,  every  dollar  of  which  is  a  legal  tender  practically.  Al- 
though the  bank-notes  are  not  a  legal  tender  by  law,  yet  in  fact  we 
know  they  are.  We  have  to  receive  them  noletis  rolens.  What  other 
country  has  got  this  amount  f  France  has  $521,000,000  of  jiaper  money. 
Great  Britain  has  $217,900,000  paper  money.  But  they  have  more 
gold  than  we.     Why?    Because  you  banish  it  from  your  country. 


33 

Who  wou]!!  keep  gold  now  ?  Would  a  bauk  keep  it  ?  It  is  more  dan- 
gerous to  keep  than  paper  money,  because  it  is  heavier  and  more  dif- 
ticult  to  guard.  Would  a  merchant  keep  it  ?  Yes,  to  the  extent  that 
he  has  to  pay  it  out  to  the  Government  for  duties.  The  Government 
keeps  it,  and  the  amount  that  is  owned  by  merchants  is  held  by  the 
Government  in  New  York  on  gold  certificates.  So  the  Government  is 
the  custodian  of  all  the  gold  in  the  country  banished  from  circulation. 
Sir,  take  the  aggregate  of  our  currency,  and  where  are  you  ?  With  . 
more  pajier  money  per  tapita  than  any  country  in  Europe  has  of  paper 
and  gold. 
NoAV,  sir,  let  me  caution  Senators  in  regard  to  their  estimates  of 

fold  in  foreign  ccmntries.  In  France  it  was  estimated  that  there  was 
rOO,00(),000  of  gold,  and  France  Avas  comjielled  to  pay  of  this  gold 
more  than  |400,(t00,000  to  Germany  in  the  settlement  of  their  diffi- 
CTilties. 

Mr.  SCHURZ.     A  thotisand  millions. 

Mr.  SHERMAN.  I  beg  pardon.  The  sum  paid  was  .fl, 000,000,000  ; 
but  this  was  partly  by  credits  and  partly  in  gold.  The  effect  of  the 
Germanic  war  has  been  that  the  gold  of  France  has  enormously 
decreased;  no  one  can  tell  exactly  how  much  is  left. 

The  Senator  from  Indiana  a  moment  ago  said  they  had  $300,000,000 
of  gold  in  circulation  in  Great  Britain.    I  am  not  prepared  to  dispute  it. 

Mr.  SCHURZ.  Seventy  million  pounds  sterling,  according  to  tlie 
estimate  I  had  yesterday. 

Mr.  SHERMAN.  I  am  not  prepared  to  dispute  it,  because  I  can 
show  by  English  AAriters,  and  even  by  the  declaration  of  the  chancellor 
of  the  exchequer,  that  it  is  utterly  impossible  to  tell  how  much  gold 
there  is  in  England.  There  are  no  returns  that  enable  them  to  do 
it.  It  is  kept  there  by  joint  stock  companies,  by  the  Bank  of  Eng- 
land, and  by  i)rivate  i»ersons.  A  large  portion  of  the  commerce  of 
England  being  foreign  commerce,  large  masses  of  gold  in  the  Qmn 
of  different  countries  are  held  by  merchants.  As  to  the  precise  amount, 
no  one  (;an  tell  what  it  is. 

Mr.  SCHURZ.  I  read  tlie  other  day  from  the  statement  of  an  English 
financial  writer  that  they  had  £70,000,000  sterlirig  there  ;  but  it  was 
a  mere  estimate. 

Mr.  MORTO'N.     Three  hundred  ■and  fiftv  million  dollars. 

Mr.  SHERMAN.  Now  add  the  ,f3.5(»,000,000  of  gold  currency  to  the 
amount  of  their  paper  money.  Take  it  as  you  claim  it,  biit  w^hat  does 
it  make?  Fivehundred  andsixty-six  million  dollars  to  do  the  business 
of  that  nation  of  thirty-two  millions ;  while  we  have  of  inconvertible 
paper  money  $770,000,000.  Why  therefore  say  that  we  have  less  money 
than  England  ?     Sir,  we  have  more  per  capita. 

Mr.  BAYARD.  Will  my  friend  from  Ohio  permit  me  to  suggest  to 
him,  also,  that  tliere  is  a  large  part  of  this  country,  the  Pacific  coast, 
where  the  currency  is  gold  ;  so  that  that  which  is  merchandise  simply 
in  the  Atlantic  States  is  curi'ency  on  the  Pacific  coast ;  and  that,  also, 
in  the  city  of  New  York  and  other  ports  of  the  Atlantic  States  a 
large  amount  of  the  business  of  merchants  is  transacted  upon  a  gold 
basis,  and  in  gold  alone  ?  In  considering  the  amoiint  of  money  that 
is  furnished  to  the  people  I  think  he  is  very  much  understating 
when  he  confines  himself  to  paper  currency  alone. 

Mr.  SHERMAN.  I  have  no  doubt  of  it.  I  have  no  doubt  that  the 
money  now  in  circulation  in  this  country  is  greater  jjct-  c<ipita  than  in 
any  nation  in  Europe  ;  and  I  thank  my  Iriend  for  reminding  me  that 
the  Pacific  coast  iises  gold  and  silver,  it  is  estimated,  to  the  extent  of 
twenty  or  thii'ty  millitms  ©f  dollars,  perhaps  more. 

3 


34 

Mr.  SCOTT.  Permit  me  to  say  that  while  I  have  uo  idea  tliat  any 
2)er  capita  amount  can  be  fixed,  I  am  sure  the  chairman  of  the  Com- 
mittee on  Finance  woukl  not  wish  an  erroneotis  impression  to  go  out 
as  to  the  amount  of  currency  that  is  really  at  the  service  of  the  busi- 
ness community  when  he  states  that  we  have  $769,000,000  ])a])er  cur- 
rency. The  reserve  upon  that  usually  amounts  to  about  $200,000,000, 
which  reduces  it  to  about  $550,000,OflNO. 

Mr.  SHERMAN.  While  undoubtedly  there  is  a  considerable  amount 
held  by  the  banks  as  reserve,  it  is  not  so  much  as  the  Senator  from 
Pennsylvania  states.  Much  of  that  is  in  the  form  of  credits  by  deposit 
banks!  But  let  me  remind  the  Senator  that  in  England  the  Bank  of 
England  holds,  and  is  compelled  to  hold,  a  large  portion  of  the  gold  in 
England  as  a  resei've.  Every  bank  has  to  have  a  reserve.  So  with  the 
Bank  of  France.  There  is  a  nuich  larger  percentage  of  reserve  lield 
in  the  Bank  of  France  now  than  is  held  l>y  the  banks  of  the  United 
States.  Their  reserve,  if  I  remember  aright,  is  about  30  per  cent., 
whereas  our  banks  average  less  than  20  per  cent.,  and  much  of  this  in 
credits.  The  Bank  of  England  reserve  is  greater  than  ours,  and  Bag- 
ehot  has  written  a  book  to  show  that  it  is  too  small. 

As  a  matter  of  course,  if  y<m  go  into  all  the  details  about  reserve 
you  could  never  get  the  precise  results.  The  truth  is,  there  is  no  mode 
of  testing  how  much  money  is  needed  to  do  the  business  of  a  country 
except  that  amount  which  can  be  maintained  at  par  in  gold.  The 
very  fact  that  our  money  is  depreciated  11  per  cent,  is  as  conclusive 
as  any  sum  in  arithmetic  can  be  that  you  have  more  money  than  can 
be  maintained  at  the  proper  legal  standard.  You  cannot  get  around 
that.  There  is  but  one  standard,  and  every  addition  to  the  volume 
that  cannot  be  maintained  at  that  standard  is  conclusive  evidence  that 
there  is  too  much  money  afloat  of  that  kind. 

Mr.  MORTON.    Will  my  friend  allow  me  to  make  a  suggestion  ? 

Mr.  SHERMAN.     Yes;  but  I  fear  I  shall  never  get  through. 

Mr.  MORTON.  I  understood  my  friend  to  assert  just  now  that  tlie 
depreciation  of  the  currency  was  evidence  that  there  was  too  much 
of  it.     Is  that  the  statement  ? 

Mr.  SHERMAN.    That  is  conclusive  evidence.    - 

Mr.  MORTON.  If  that  be  true,  then  if  we  cut  off  10  per  cent,  of 
the  volume  of  currency,  the  depreciation  being  10  per  cent.,  that 
alone,  according  to  his  argument,  ought  to  bring  it  to  par.  I  want 
to  know  whether  it  will  do  it. 

Mr.  SHERMAN.  My  own  impression  is  that  less  than  that  will  do 
it;  that  when  you  give  additional  value  to  thegi'eenback,  sothat  peo- 
ple can  use  it  as  gold,  so  that  it  will  be  equivalent  to  gold,  the  gold 
itself  will  become  a  part  of  the  currency.  It  is  pro))able  the  full 
amount  of  the  present  issue  of  legal-tenders  can  be  maintained  if 
you  will  only  give  it  an  equal  value  with  gohl.  When  you  make  your 
paper  money  efjual  to  gold  it  floats  with  gohl  and  fills  the  channels 
of  trade.  In  my  deliberate  judgment,  in  this  country  of  broad  ex- 
tent, as  my  fiieud  says,  of  varied  population,  of  varied  ]>roductions, 
a  larger  amoimt  of  currency  could  be  maintained  at  par  in  gold  than 
the  actual  currency  now  in  hand.  I  have  some  statistics  here,  but  I 
am  too  weary  to  go  into  them,  which  show  what  amount  of  cuiaency 
we  maintained  at  par  in  gold  before  the  war,  and  by  a  comparison 
of  our  condition  then  and  now  I  could  estimate  what  amount  can  be 
maintained.  liut,  sir,  the  only  standard,  the  only  rule,  by  which  we 
can  judge  of  the  amount  of  paper  money  is  that  quantity  which  can 
be  maintained  at  par  in  gold.  If  you  declare  illegal  and  invalid  this 
standard,  no  man  can  teli  hoAvmuch  circulation  is  needed.     The  onh" 


35 

way  JH  to  test  it  by  tlic  barometer  of  New  Yc;rk.  This  is  its  sure  a 
test  as  tlie  instruments  here  around  the  Senate  Chamber  are  tests  of 
the  heat  of  this  room.  , 

There  is  another  class  of  measures  now  pending  on  ■which  I  wish 
to  make  a  few  remarks,  and  they  are  the  ]iropositions  to  inflate  the 
currency  still  more.  The  i)roces8  of  inflation  is  now  going  on  daily 
while  we  are  debating.  This  surely  ought  to  be  stopped.  This  issue 
of  the  forty-four  millions  ought  to  be  suspended  at  once.  The  payment 
of  this  money  ought  to  be  arrested  and  some  other  i)rovision  made  to 
pay  the  ordinary  expenses  of  the  Government.  The  plan  that  I  sug- 
gested a  moment  ago  would  do  that,  by  authorizing  the  funding  of 
notes  into  bonds.  But  there  are  other  propf)sitions.  The  Senator 
from  Michigan  jiroposes  to  issue  $100,000,000  increased  cuiTency,  to 
require  the  system  of  banks  now  organized  over  this  country  to  retire 
their  circulation,  and  to  issiie  an  amount  of  greenbacks  equal  to  the 
whole,  aggregating  $800,000,000,  and  this,  I  suppose,  in  addition  to  the 
fractional  currency;  in  other  words,  an  increase  of  currency  of  about 
$100,000,000. 

Mr.  FERRY,  of  Michigan.     Including  the  forty-four  million  reserve  ? 

Mr.  SHERMAN.  Yes;  including  the  forty-four  mill  ion  reserve,  an 
increase  of  $100,000,000.  I  appeal  to  my  friend,  to  his  candor,  his 
sincerity,  to  say  whether  the  immediate  effect  of  that  would  not  be 
to  depreciate  that  which  is  outstanding. 

Mr.  FERRY,  of  Michigan.     I  would  merely  say  that,  in  1870,  we 

increased  the  currency  hfty-four  millions,  and  the  premium  on  coin 

to-day  is  less  than  it  was  during  the  average  of  that  year.    Now,  I 

ask  by  what  reasoning  will  the  price  of  coin  increase  if  we  increase 

he  currency  to  about  the  same  amount,  which  is  the  ratio  I  propose? 

Mr.  SHERMAN.  The  remark  now  made  by  the  Senator  compels 
me  to  make  a  confession,  that  I  believe  that  act  of  1870  did  arrest  the 
downward  course  of  gold  and  the  rapid  march  toward  specie  payments. 
As  I  contributed  to  the  passage  of  that  act,  I  am  soiTy  to  take  the 
responsibility.  From  the  time  of  the  passage  of  that  act  the  appre- 
ciation toward  the  specie  standawl  Avas  arrested,  and  now,  to-day,  four 
years  after  the  }tassage  of  that  act,  your  paper  money  is  worth  no  more 
than  it  was  at  the  date  of  the  passage  of  that  act. 

Mr.  FI5RRY,  of  Michigan.  I  hold  in  my  hand  a  statement  of  the 
prices  of  gold  during  the  several  months  of  1870,  and  the  average  pre- 
mium on  gold  in  1870  was  higher  than  that  in  1873. 

Mr.  SHERMAN.  I  have  the  standard  here.  I  took  the  18tli  day  of 
March,  1870,  wliich  was  about  the  average  of  that  year,  because  it  was 
a  year  after  the  passage  of  our  law  of  1869.  The  premium  on  gold 
was  then  11| ;  to-day,  I  believe,  it  is  12.  Some  one  tells  me  gold  is  112 
in  New  York  to-day ;  so  that  in  four  years  the  advance  we  have  made 
to  specie  payments  is  one-eighth  of  1  per  cent,  backward. 

Mr.  FERRY,  of  Michigan.  Then  the  Senator  admits  substantially 
that  the  premium  on  coin  is  the  same  now  that  it  was  then.  With  an 
increase  of  $54,000,000  circulation  in  1870  the  premium  on  coin  has 
not  advanced. 

Mr.  SHERMAN.     Thirty-nine  million  dollars  of  bank  circulation. 

Mr.  FP3RRY,  of  Michigan.     Of  bank  circiilation. 

Mr.  SHERMAN.  If  .$.'')4,000,000  had  been  issued,  it  would  have  been 
more ;  but  only  $39,000,00(»  has  been  issued  under  the  law ;  $54,000,000 
were  authorized,  but  only  $39,000,000  issued. 

Mr.  FERRY,  of  Michigan.  I  do  not  wish  to  interrupt  the  Senator, 
but  he  has  not  escaped  the  fact  that  $25,000,000  of  the  $44,000,000 
reserve  of  greenbacks  are  already  out ;  that  more  than  makes  up  the 


36 

amount,  so  that  the  increase,  as  I  propose  it,  is  about  the  same  that 
■was  made  in  1870.  Then,  if  that  increase  of  S54,00<),lXH)  in  1870  has 
not  advanced  the  premium  on  coin,  upon  what  basis  or  reasoning  does 
the  Senator  arrive  at  the  conclusion  which  he  states,  that  my  propo- 
sition of  increase  of  about  §50,000,000  will  increase  the  premium  on 
coin? 

Mr.  SHER>LA^'.  Because  there  is  no  doubt  about  it.  Every  addi- 
tion to  the  currency  does  it.  If  I  wanted  to  teach  my  friend  this  plain 
lesson  in  political  economy  I  should  have  to  read  to  him  from  the 
school-books  used  in  every  college,  down  to  the  last  work  on  political 
economy.  It  is  an  axiom  of  political  economy,  which  lies  at  the  very 
groundwork  and  foundation,  repeated  by  every  author  that  ever 
wrote  upon  the  subject,  as  necessarj'  a  consequence  as  that  water  will 
seek  its  own  level.  Any  increase  of  paper  currency  tends  to  impair 
its  value  when  it  is  once  depreciated. 

Mr.  FERRY,  of  Michigan.  I  merely  put  against  that  theory  of  the 
books  the  facts  of  the  present.  The  Senator  has  stated,  I  believe, 
that  the  price  of  gold  in  1870  was  substantially  what  it  is  to-day  ;  I 
think  only  a  difference  of  ^  per  cent.,  or  something  of  that  kind.  If, 
then,  with  an  increase  of  So4,000,000  circulation  since  1870  the  price 
of  gold  has  not  advanced,  then  I  say  that  experience  against  the  books 
verifies  what  I  now  say,  that  the  increase  which  is  proposed  will  not 
any  more  advance  the  premium  on  coin  than  did  the  increase  of  1870. 

Mr.  SHERMAN.  After  the  passage  of  the  act  the  Senator  refers 
to,  authorizing  this  increase,  the  price  of  gold  steadily  advanced  and 
again  commenced  to  decline.  As  a  matter  of  course,  if  we  could 
once  fix  the  amount,  we  could  no  doubt  come  to  it  in  time ;  but  what 
assurance  have  we  that  after  you  have  Lssued  your  5ilO<),000,000,  and 
gold  goes  vi\>  to  133,  as  it  will,  and  then  after  the  power  of  inflation 
has  exhausted  itself  and  gold  commences  to  go  down,  what  reason  is 
there  to  suppose  that  my  honorable  friend  from  Michigan,  or  some 
successor  of  his,  will  not  come  here  and  demand  another  inflation, 
and  then  say  that  the  inflation  will  not,  at  the  end  of  four  years, 
increase  the  price  of  gold  f 

There  is  no  mode  of  accounting  for  the  fact  that  the  value  of  our 
greenback  has  not  advanced  one  single  step  for  four  years,  excei>t  that 
you  have  increased  the  volume  of  pai>erand  have  taken  no  steps  what- 
ever to  advance  its  value.  As  a  matter  of  course,  if  you  would  main- 
tain the  amount  of  paper  money  at  a  certain  rate  for  one  bundled 
years  till  our  countrj-got  to  contain  three  hundred  millions  of  people, 
it  would  be  all  as  good  as  gold ;  but  if  the  Senate  should  follow  the 
lead  of  my  honorable  friend  and  dilute  the  cunency,  put  water  into 
the  elements  that  now  compose  our  currency,  it  would  undoubtedly 
depreciate  it. 

Senators,  we  have  now  arrived  at  a  stage  of  our  history  where,  if 
we  will  obey  the  law  and  keep  the  public  faith,  we  shall  surely  come 
to  safety,  prosperity,  resting  upon  the  universal  standard  of  value — 
when  industry  will  be  rewarded,  and  not  cheated  by  the  depreciation 
of  paper  money.  If,  on  the  other  hand,  you  wiU  enter  again  into  a 
depreciation  of  your  paper  money,  adopting  the  cry  of  expansion, 
"  more  money,"  you  will  surely  travel  a  road  that  many  nations  have 
traveled  before  us,  to  bankruptcy  and  rei)udiation. 

I  will  turn  over  my  fiiend  from  Michigan  for  a  further  answer  to 
my  friend  from  Indiana.  The  Senator  fiom  Indiana  says  that  the 
issue  of  the  paper  money  under  the  law  of  1870,  the  authority  to 
grant  new  banks,  was  not  expansion,  because  by  the  same  law  the 
3  per  cents  were  retired.     He  construes,  therefore,  the  law  of  1870  a.s 


37 

not  inflatiug  the  currency  at  all.  My  friend  from  Micliigau,  I  under- 
stand, regards  it  as  expansion  to  the  fullest  extent  of  the  amount  of 
notes  issued.     I  hope  they  will  settle  it  between  them. 

Mr.  MORTON.     I  would  rather  settle  it  just  now. 

Mr.  SHERMAN.     Not  in  my  time. 

Mr.  FERRY,  of  Michigan.     It  is  rather  shutting  us  down. 
vMr.  SHERMAN.     Mr.  President,  I  want  to  get  through. 

The  PRESIDENT  |>ro  tempore.  The  Senator  from  Ohio  declines  to 
yield. 

Mr.  SHERMAN.  I  suppose  the  Senators  who  advise  more  paper 
money  will  settle  this  matter  in  a  private  conference. 

There  is  another  view  I  wish  to  take  of  this  plan  of  expansion.  If 
you  issue  the  proposed  three  sixty-five  convertible  bonds,  what  will 
they  be  worth  ?  I  see  here  some  New  York  bankers.  They  have  com- 
puted the  value  of  these  bonds  before  they  are  issued  by  the  rule  of 
three.  A  .5  per  cent,  bond  is  now  practically  par  in  gold.  If  a  5  per 
cent,  bond  is  at  par  in  gold,  what  would  a  three  sixty-five  gold  bond 
be  worth  f  Senators  can  answer  that  very  quickly,  because  there  is 
a  reduction  in  value  of  .one-third  to  commence  Avith.  If  a  5  per  cent, 
^old  bond  is  only  worth  par,  a  three  sixty-five  gold  bond  would  only 
be  worth  two-thirds  of  par.  Then,  if  a  three  sixty-five  gold  bond  is 
worth  sixty-six  cents  on  the  dollar,  what  will  a  three  sixty-five  con- 
vertible paper  l)ond  be  worth?  That  query  will  be  put  to  every 
broker  and  banker  in  New  York  the  very  moment  you  authorize  such  a 
bond  to  be  issued.  They  would  measure  your  device  by  the  gold  stand- 
ard before  you  issued  it.  They  Avould  quote  a  bond  convertible  and 
reconvertible  into  irredeemable  pai)er  money  at  its  value  in  gold. 

But,  sir,  there  is  one  other  reason  why  all  these  plans  and  all  these 
schemes  of  more  i)aper  money  ought  not  even  to  be  debated  here.  An 
increase  of  paper  money  beyond  four  hundred  millions  would  be  a  clear 
and  paljjable  violation  of  the  public  faith.  In  the  darkest  hours  of 
the  war,  when  every  patriot  trembled,  when  our  fate  hung  in  the 
balance,  when  our  armies  were  before  Richmoiul,  when  our  armies 
were  on  the  march  through  Georgia  to  the  sea,  when  everybody  felt 
that  the  danger  of  inconvertible  paper  money  was  likely  to  strike  us 
from  the  list  of  nations,  when  our  paper  money  then  outstanding  had 
fallen  so  that  it  took  $2.80  to  buy  one  dollar  in  gold,  gold  being  at  a 
premium  of  280,  then  it  was  that  we  entered  into  a  stipulation  with 
the  public  creditor,  which  is  a  part  of  the  act  of  1864,  a  part  of  the  act 
under  which  we  borrowed  money  and  pledged  the  public  faith.  It 
was  a  solemn  promise  that  under  no  circumstances,  never  would  we 
issue  more  than  four  hundred  millions  of  paper  money  and  an  addi- 
tional reserve  of  fifty  million  dollars  pledged  to  pay  a  debt  then  ex- 
isting and  which  has  since  been  paid. 

Mr.  SPRAGUE.     That  was  under  duress. 

Mr.  SHERMAN.  From  whom  ?  My  friend  from  Rhode  Island  sug- 
gests quietly  that  this  pledge  was  under  duress.  No,  Mr.  President; 
the  United  States  was  never  under  duress  except  from  the  rebellion. 
Then  it  was  under  duress.  But  when  we  were  under  duress  from 
rebellion  in  the  Southern  States  we  gave  our  sacred  pledge  to  the 
men  who  helped  us,  to  the  men  who  loaned  us  money,  to  the  capi- 
talists, to  the  laborers,  to  the  servants,  to  the  women,  to  the  children ; 
yea.  Senators,  from  every  part  of  this  broad  laud,  every  county  and 
every  town,  every  village  and  every  hamlet,  every  man,  woman, 
and  child  poured  "their  little  earnings  into  the  stream  that  flowed 
into  the  national  Treasury  in  the  summer  of  1864  ;  and  every  dollar 
of  the  loan  then  made  was  made  ui>on  the  faith  of  the  sacred  obliga- 


38 

tion  of  the  United  States  that  our  j»aper  money  should  never  exceed 
$400,000,000. 

Sir,  I  trust  in  God  the  day  never  will  come  when  we  shall  violat* 
that  pledge,  until  we  make  those  promises  equal  to  par  in  gold.  I 
will  not  acknowledge,  with  my  friend  from  Rhode  Island,  that  we  . 
were  under  duress.  Certainly  Ave  were  not  under  duress  from  the 
men,  women,  and  children  wlio  loaned  us  money.  They  gave  us  the 
means  by  which  we  put  down  the  people  who  were  in  arms  against 
our  Government,  and,  so  help  me  God,  I  never  will  violate  the  faith 
pledged  to  them.  The  act  of  1864  is  known  to  every  Senator.  I  will 
not  read  it.  It  is  as  plain  and  strong  and  clear  as  language  could 
make  it. 

But,  sir,  we  are  told  that  to  issue  these  three  sixty-five  honds  con- 
vertible into  paper  money  will  lower  the  rate  of  interest ;  and  my 
friend  from  Indiana,  with  that  happy  faculty  which  ^he  has  of  avoid- 
ing difficulties,  says  when  you  have  a  great  deal  of  money,  and  issue 
more,  does  not  that  cheapen  it  f  Is  not  the  right  Avay  to  cheapen 
money  to  issue  more  of  it  ?  If  you  had  a  great  abundance  of  any 
commodity  to  sell  would  it  not  be  cheaper  ?  -That  is  the  argument. 
Well,  sir,  it  will  cheapen  money  to  issue  more..  It  will  cheapen  money 
as  tested  by  the  gold  standard,  and  brokers  will  tell  you  every  day 
how  much  it  cheapens  it.  But  Avho  will  it  benefit  to  cheapen  money  ? 
It  will  aid  a  man  to  pay  a  debt  contracted  upon  a  different  basis,  and 
to  that  extent  will  cheat  the  creditor. 

Mr.  MORTON.    The  Senator  does  not  state  the  proposition  correctly. 

Mr.  SHERMAN.    I  will  give  you  time  presently. 

To  the  extent  that  it  is  paid  in  payment  of  a  debt  already  due  and 
p.iyable,  it  will  cheat  the  creditor  and  cheapen  his  debt;  but  it  will 
not  cheapen  supplies,  provisions,  clothing,  food,  raiment.  It  may 
cheat  the  laboring  man ;  for  the  laboring  man  may  think  it  is  the 
same  money.  He  may  take  his  two  dollars  a  day  just  as  he  did  before ; 
but  when  he  comes  to  spend  those  two  dollars  for  the  food  that  sup- 
plies his  life,  or  for  the  clothing  that  comforts  his  children,  he  will 
find  that  somebody  else  is  cheated,  and  he  is  the  one.  Sir.  every  effort 
whatever,  every  device  to  relieve  needy  men  in  distress  or  in  debt, 
that  will  depreciate  the  currency,  adds  to  the  daily  toil  of  laboring 
men,  adds  to  the  cost  of  food  and  clothing.  Why,  sir,  Mr.  Webster 
never  uttered  a  grander  truth  in  his  life  than  that  famous  })assage, 
which  I  have  almost  forgotten,  but  the  substance  of  which  is  that  the 
best  way  to  enrich  the  rich  man's  field  by  the  sweat  of  the  poor  man's 
brow  is  by  the  use  of  inconvertible  paper  money.  No  truth  was  ever 
more  forcibly  uttered. 

But  they  tell  us  that  it  will  lessen  the  rate  of  interest.  Let  us  see. 
This  is  a  matter  of  experience.  We  have  had  a  slight  experience  in 
this  country,  and  we  have  had  the  experience  of  other  countries,  and 
the  fact  is  just  the  reverse^ — the  more  money  is  depreciated  the  higher 
is  the  rate  of  interest.  I  havesomeknowledge  of  this  by  my  own  experi- 
ence. I  remember  the  p.anics  that  have  occurred  in  this  country  since 
1837.  I  recall  to  the  recollection  of  my  friend  from  Iowa  what  took  place 
in  his  own  State  in  1857.  I  was  in  that  beautiful  State  in  the  spring  of 
1857.  The  people  were  rich,  abounding  in  riches,  fanciful  riches;  money 
was  plenty.  One  man  had  made  a  profit  of  100  per  cent,  on  a  piece  of 
land  that  he  had  never  seen  and  had  owned  but  three  months.  An- 
other had  laid  out  a  town  and  was  selling  lots  at  fabulous  prices. 
Everybody  was  rich ;  paper  money  was  abundant — wild-cat  paper 
money;  all  kinds  of  money.  Good  money  was  there,  too,  gold  as  well 
as  paper.    Interest  was  40  per  cent.,  and  many  told  me  that  they 


39  A     000  611  040 


could  make  money  by  borrowing  at  40  per  cent.  Tlicy  offered  to  give 
me  40  per  cent,  for  money  to  buy  land  with  within  five  miles  of  a 
settlement.  Evervbody  was  rich  ;  interest  high  ;  times  were  glorious. 
In  August  the  failure  of  the  Ohio  Life  Insurance  and  Trust  Com- 
pany burst  the  bubble.  The  money  that  was  loaned  upon  that  inter- 
est was  not  paid,  and  the  men  who  were  dealing  in  these  high-blown 
speculations  "  went  up  the  spout,"  to  use  a  common  phrase.  So  it 
Avas  in  the  panic  of  1837.  Upon  this  point  I  could  read  you  what  is 
said  by  Mr.  Mill ;  but  that  is  mere  "  platitude ;"  that  is  only  the  expe- 
rience of  the  pa.st,  of  oUl  men  of  a  different  day  and  generation.  I 
could  read  you  from  many  books.  I  could  read'  you  the  story  of  the 
South  Sea  bul)ble,  when  securities  went  up  and  interest  was  100  per 
cent.  So  in  all  times  which  precede  a  financial  i)anic,  when  people 
think  they  arc  prosperous,  when  they  make  money  by  marking  up 
their  goods,  interest  is  enormously  high.  Sir,  the  experience  of  man- 
kind proves  that  interest  is  liigher  under  a  depreciated  paper  money 
than  it  is  under  a  gold  standard.  Is  it  worth  while  to  waste  more 
time  to  show  the  utter  fallacy  of  the  allegation  that  more  money 
would  cheapen  interest  ? 

But  it  is  said  that  the  recent  pariic  was  caused  by  the  want  of  money, 
by  the  want  of  more  paper  money  ;  and  paper  money  for  what  ?  To 
build  remote  railroads,  to  carry  out  schemes  for  the  future,  to  engage 
in  speculative  enterprises.  The  money  of  the  country  and  the  capi- 
tal of  the  country  was  absorbed  in  unproductive  industry.  There- 
fore it  was  that  the  blow  fell  and  destroyed  a  great  many  good  men. 
But  how  is  it  now  ?  Why,  sir,  at  this  moment  money  is  easier  to 
be  had  in  the  city  of  Ne\y  York  than  it  has  been  for  years  by  per- 
sons who  are  engaged  in  ordinary  commercial  business,  where  the  cir- 
cumstances that  surround  them  inspire  confidence  and  credit.  The 
same  money  that  was  in  circulation  before  the  panic  is  in  circulation 
now,  and  more.  Sir,  this  is  not  a  currency  panic.  It  has  no  connec- 
tion with  our  ciu'rency.  Such  panics  have  occurred  in  Great  Britain 
iind  the  United  States  in  specie-paying  times.  It  was  simply  caused 
by  unproductive  investments.  The  currencj'  is  good,  only  lacking  one 
■quality  to  make  it  better ;  that  is,  if  it  was  as  good  as  gold  it  would 
then  be  the  best.  It  is  secure.  Nor  was  it  a  bank  panic,  I  will  say, 
for  the  relief  of  my  friend  from  Indiana ;  for  I  am  glad  to  agree  with 
him  on  one  or  two  things.  The  banks  have  stood  the  panic  very 
well.  With  the  exception  of  four  or  five,  the  national  banks  have 
not  failed ;  and  not  one  has  failed  unless  by  a  clear  violation  of  the  law 
of  its  organization.  Not  one  that  has  been  brought  to  my  attentionhas 
failed  except  by  the  use  of  the  bank  by  the  owners  in  loans  and  invest- 
ments prohibited  by  the  national-currency  act. 

Mr.  WEST.     Is  suspension  to  i)ay  deposits  a  failure  ? 

Mr.  SHERMAN.  Yes;  but  this  suspension  was  the  result  but  not 
the  cause  of  the  panic.  It  was  justified  by  the  same  circumstances 
that  would  authorize  the  increase,  of  the  amount  of  notes  of  the  Bank 
•of  England  in  violation  of  law.  The  banks  did  suspend  payments; 
and  that  only  proved  the  truth  of  what  I  said  a  while  ago,  that  no 
plan  of  redemption  would  be  wise  and  good  unless  it  has  some  pro- 
vision for  jusr  such  panics.  There  nmst  be  times  when  banks  are  com- 
pelled to  use  their  n^serves,  all  their  resources,  and  borrow  themselves 
instead  of  being  lendera,  and  provision  should  be  made  for  such  times. 
The  banks  did  commit  an  act  of  justifiable  bankruptcy  when  they 
refused  to  pay  their  depositors;  but  that  Avas  temporary — a  bending 
before  the  storm.  They  rapidly  accumulated  and  gathered  in  their 
resources,  as  the  Bank  of  Englainl  would  under  like  circumstances, 


UCSB  UBUR'<  Y-OTZ"^^ 

40 

calling  ill  their  loans  and  denying  loans  to  their  customers,  and  iue 
now  in  a  stronger  condition  than  ever.  They  now  have  a  greater 
reserve  than  they  had  before  the  panic. 

Mr.  President,  the  condition  of  onr  cnrrency  has  no  relation  what- 
ever to  the  panic  that  j^assed  over  the  country. 

Mr.  MORTON.     That  is  a  very  important  admission. 

Mr.  SHERMAN.  In  my  judgment  it  is  true,  and  is  perfectly  con- 
sistent with  my  argument.  At  this  time,  when  nearly  all  debts  liave 
been  settled ;  Avhen  the  panic  has  swept  away  numy  fortiines  ;  Avheu 
we  now  have  all  the  money  that  ever  was  atloat ;  whencontidence  is 
restored ;  when  the  price  of  eA'ery  commodity  is  advanced  to  the  piice 
it  was  before  the  panic — now  is  the  golden  moment  Avhen  we  should 
take  a  step  in  the  right  direction  to  make  our  money  equal  to  gold. 
I  never  have  charged  the  panic  upon  the  currency.  Indeed  I  Avasthe 
tii'st  in  the  midst  of  the  panic  fto  declare  that  the  cuirency  had  no 
connection  with  the  panic.  The  money  Avas  secure ;  it  was  good, 
only  that  it  was  not  as  good  as  gold.  That  was  the  only  fault  to  be 
found  with  it.  Men  lioarded  it.  That  added  fuel  to  th<s  tire  and  fed 
the  panic.  Its  origin,  like  the  panic  of  1866  in  Great  Britain,  was 
in  the  absoiittion  of  capital  in  unproductive  enteii)rises.  The  want 
of  confidence  created  by  the  failure  of  great  houses  gave  the  first 
alarm  ;  then  came  the  Avithdrawal  of  deposits,  the  dejdetion  of  the 
banks,  the  siispension  of  the  banks.  Then  laborers  began  to  be  dis- 
charged, productive  industry  began  to  be  stopped ;  Imt  in  a  short 
time  the  ordinary  business  of  the  country  was  resumed,  Avhen  people 
found  that  they  were  not  all  broke.  It  was  tlie  old,  old  story  re- 
peated periodically,  arising  fi'om  diflerent  causes,  but  having  the 
same  history  and  results.  These  panics  are  but  the  ebb  and  flow  of 
great  enterprises.  Tliey  start  with  reviving  prospeiity  ;  they  grow 
with  expanding  hope  and  energy;  they  culminate  with  ejiterjirises 
too  great  for  the  time,  and  the  blind,  unreasoning  fear  that  sjirings 
from  the  faihire  of  these  enterprises  does  in  the  ])anic  more  harm  and 
causes  more  destruction  of  values  than  the  injury  done  by  failures. 
No  action  of  ours  can  prevent  these  i)anics.  All  we  cm  do  is  to 
improve  the  opportunity  ottered  us  to  place  the  xmblic  faith  of  our 
country  on  an  enduring  foundation. 

I  again  apjieal  to  the  Senate  to  now  tirnily  take  its  stand  against 
any  inflation  of  paper  money  under  any  circumstances,  under  any 
provocation,  or  any  jdea.  This  alone  Avill  do  a  great  good  to  the 
counrrj'.  But  if  it  Avill  go  further — if  the  Senate  Avill  lead  the  Avay  to 
some  wise  and  practical  measure,  looking  to  a  redemption  of  the 
pledged  faith  of  the  United  States,  the  people  we  represent  will  have 
cause  to  be  proud  of  the  political  body  which  they  have  so  long  hon- 
ored. I  believe,  sir,  that  no  act  of  the  Senate  would  so  much  inspire 
confidence,  give  strength  to  our  Vnisiness  men,  revive  our  industrj-,  as 
by  a  decided  vote  on  these  propositions  to  shoAv  that  our  firm  purpose 
is  to  take  the  road  that  leads  to  specie  payments  and  a  restored  currency. 
Sir,  I  haA'e  been  many  years  here  and  in  the  other  House,  during 
long  and  troublesome  controversies,  during  peace  and  war,  and  I  for 
one  desire  to  see  the  work  of  oiir  generation  crowned  by  the  greatest 
of  civic  triiim]>hs,  that  of  performing  every  promise,  and  to  leave  the 
nation  without  dishonor;  its  promises  good,  its  credit  untarnished, 
its  wealth  and  power  increasing  and  expanding. 


